A low doc loan got you into your property when your tax returns weren't ready. Now your financials are in order — and you're paying a premium rate for documentation flexibility you no longer need. Switching to full doc is one of the highest-return financial moves a self-employed borrower can make. This guide shows you exactly when to move and how.
The Rate Gap You're Paying
Low doc loans carry a risk premium because the lender is relying on a declaration or BAS rather than verified tax returns. That premium is typically 0.5–1.5% above equivalent full doc rates. On a $700,000 loan balance:
Based on $700K loan balance, 1% rate differential. Example only — actual rates vary.
Over a 3-year low doc period, that's $21,000 in additional interest. Most borrowers don't realise the switch is possible the moment their second year's tax return is lodged.
When You're Ready to Switch: The Checklist
You're eligible for a full doc refinance the moment you tick all of these:
-
2 years personal tax returns lodged with ATO
Both years must show the income you're declaring. If one year shows a significant dip, some lenders will average — others will use the lower year.
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2 years business tax returns (if company or trust)
Individual tax returns alone aren't sufficient for company or trust structures — the entity financials must also be lodged.
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Notice of Assessment (NOA) for both years
ATO-issued NOAs confirm the tax return was lodged and assessed. Without these, the return cannot be used as income verification.
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LVR at or below 80% (or can reach it)
Most competitive full doc rates sit at 80% LVR or below. If property growth has reduced your LVR, this may already be achieved.
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Clean repayment history on current loan
No missed or late payments in the last 12 months. This is reviewed by all refinance lenders.
The Refinance Process: Step by Step
Confirm your current loan details
Get your current balance, interest rate, remaining term, and any break fees or discharge fees. Some low doc loans have exit fees — typically $0–$1,200 for variable, or significant break costs for fixed rate. Request a payout figure from your current lender.
Get a property valuation
An upfront valuation (free through a broker) tells you your current LVR. This determines which product tier and rate you qualify for. If your property has grown, your LVR may have dropped from 80% to 65–70% — unlocking the best rate tiers.
Gather your full doc package
Collect: last 2 years personal tax returns + NOAs, last 2 years business tax returns + NOAs (if applicable), 3 months personal bank statements, 3 months business bank statements, accountant letter (optional but helpful), current loan statement.
Compare full doc lenders
With a broker, you can compare full doc rates across 30+ lenders simultaneously. Don't assume your current lender's retention team will offer the best rate — they rarely do. The target is a mainstream bank or major non-bank at competitive full doc rates.
Submit and settle
Full doc refinances typically settle in 3–6 weeks from application. Your broker handles the discharge of the old loan and registration of the new one. From settlement day you're on the new lower rate.
Don't wait for the "perfect" tax return
The most common mistake: waiting until income looks "good enough." If you can service the loan on your declared income and your LVR is below 80%, switch now. Every month you wait is $500–$900 in unnecessary interest on a $700K loan.
What If Your Tax Returns Show Less Than Expected?
This is the most common obstacle. If your legitimate deductions have reduced your taxable income below what you need to service the loan on full doc terms, you have several options:
| Situation | Solution |
|---|---|
| Low income year 1, good year 2 | Some lenders use most recent year only. Ask broker to target these lenders specifically. |
| Add-backs reduce the gap | Depreciation, one-off expenses, and super contributions can be added back to taxable income. Work with your accountant to prepare an add-backs schedule. |
| Income growth trend is clear | Pepper Money and Macquarie will sometimes accept a year 2 upward trend with explanation. Strong BAS turnover supports the case. |
| Still can't qualify on full doc | Wait one more lodgement cycle. Meanwhile, ask current lender for a rate review — threaten to leave. Many low doc lenders will negotiate 0.2–0.4% off without requiring you to refinance. |
Find out if you're ready to switch
Tell us your current rate and loan balance — we'll calculate your potential saving and check whether your tax returns are enough to qualify for a full doc refinance now.
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Which Full Doc Lenders Are Best for Former Low Doc Borrowers
Not every full doc lender is equally comfortable with self-employed applicants. The following lenders have strong track records and established credit policies for self-employed full doc:
Macquarie Bank — Best for complex structures
Macquarie has a dedicated self-employed credit team and accepts add-backs, trust income, and dividend-based income with strong documentation. Rates are competitive for LVR below 80%. Strong for company directors and trust borrowers with clean financials.
ING — Best for straightforward sole traders
ING offers one of the most competitive full doc rates for self-employed borrowers. Simpler policy, less tolerance for complexity, but excellent rates for sole traders with 2 years clean returns showing consistent income.
Bankwest — Best for WA-based borrowers and property investors
Bankwest's self-employed policy is pragmatic — they accept averaged 2-year income and have a reasonable add-backs approach. Good for self-employed property investors looking to refinance their portfolio.
Pepper Money full doc — Best for impaired credit or unusual income
If your credit file has marks or your income pattern is unusual, Pepper's full doc product is priced above major banks but far below their own low doc rates. A useful bridge for borrowers who qualify for full doc but couldn't access a major bank.
Costs of Switching: The Full Picture
Refinancing isn't free. Here's what to factor in before committing:
| Cost Item | Typical Amount | Notes |
|---|---|---|
| Discharge fee (old lender) | $300–$600 | Variable. Some lenders waive. |
| Break cost (if fixed rate) | $0 – $15,000+ | Can be significant. Get exact figure from current lender before proceeding. |
| Application fee (new lender) | $0–$600 | Many lenders waive for refinances. Ask broker. |
| Valuation fee | $0–$300 | Often free through broker, or covered by lender cashback offer. |
| Legal / settlement fees | $300–$800 | Covers new mortgage registration. |
| Total typical cost (variable loan) | $800–$2,000 | Recovered in 2–4 months on a 1% rate saving ($700K loan) |
Break costs can wipe out the saving
If you're in a fixed rate period on your low doc loan, break costs can be $5,000–$20,000. In this case, wait until the fixed term expires before refinancing. Book the refinance conversation with a broker 3 months before expiry so everything is ready the day the fixed rate rolls off.