One Doc Home Loan While You Carry a Private Mortgage
One Doc Home Loan and Private Mortgage | Switchboard Finance
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One Doc · Concurrent Carry · Post-Budget
One Doc Home Loan While You Carry a Private Mortgage
From the underwriter's seat, a One Doc home loan with a private mortgage live against another property reads as two files in deal shape, not one. Here is how each document on the file lands, and how the post-Budget negative gearing regime shows up underneath it.
Quick Answer
A One Doc home loan can sit alongside a private mortgage on another property, but it reads as a concurrent serviceability test. The accountant's letter must explain the carry, the BAS must validate trading income, and the private facility's maturity must sit inside the One Doc term.
The two-file read from the underwriter's seat
A self-employed borrower comes to us with a One Doc home loan application while they are still carrying a private mortgage on an investment property. From the underwriter's seat, this is two files in deal shape, not one. The new One Doc commitment is read against BAS-validated trading income on one side, and the existing private facility is read as a concurrent facility serviceability test on the other side. The two reads have to reconcile before the file moves.
The mistake is treating the private mortgage as background noise that the One Doc application can step around. It cannot. The private facility is a live registered security, with a balance, a maturity, a margin, and a repayment history, and every one of those data points lands on the One Doc credit submission. What lenders actually look at on this kind of file is whether the borrower has framed the carry deliberately or whether it surfaces as a surprise debt next to a clean-looking income read. The deliberate framing wins almost every time.
The framework that works is to prepare the One Doc file and the carry narrative together, so the assessor sees both halves arrive in the same package. That is what the rest of this teardown walks through, document by document.
The documents on the file, line by line
A One Doc home loan with a concurrent private mortgage carry runs to a slightly longer document set than a standard alt-doc application. There are typically five documents that carry weight on the file, and each one answers a specific underwriter question.
The accountant's letter that explains the carry. This is the load-bearing document. It needs to confirm trading income for the income year, the business is operating, the borrower is up to date on lodgements, and critically, that the private mortgage interest is being met from trading cash flow without compromising the new commitment. A generic income-confirmation letter is not enough on a concurrent-carry file. The expanded version is what gets the file across the line.
The BAS for the most recent four quarters. Lodged BAS gives the underwriter a quarter-by-quarter read on turnover and net position, which validates the accountant's letter rather than competing with it. We call this BAS-validated trading income precisely because the two documents have to align. A divergence between BAS and the letter is a credit-committee question.
A statement on the private facility. This shows current balance, maturity date, interest margin, and the repayment record on the carry to date. The underwriter is reading the maturity against the One Doc term to confirm the private facility does not run past the new loan's comfort horizon. An arrears-free repayment record on the private side is a quietly powerful signal.
A current property valuation on the new security. Standard for any home loan, but with a concurrent carry the LVR sensitivity rises. The combined picture across both properties matters more than either security in isolation, and the LVR calculation interacts with the borrower's exit pathway off the private side.
Business bank statements for the most recent three months. Cash-flow evidence, particularly that the private mortgage interest payments are flowing out cleanly from the trading account and not from a personal overdraft or related-party top-up. This is the document that confirms the accountant's letter is not optimistic.
What clean and messy look like on the same application
Two applications with similar income figures can read very differently to credit, depending on how the carry has been documented and how the private facility sits against the new commitment. The split is rarely about the numbers, it is about the document set.
Clean File
- Accountant's letter explicitly addresses the private mortgage carry alongside trading income
- BAS for the most recent four quarters lodged and aligned with the letter
- Private facility statement shows arrears-free repayment record
- Private maturity sits comfortably inside the One Doc term, indicatively within 12 months
- Business bank statements show interest payments flowing from the trading account
- A credible exit on a defined timeframe is documented (bank refinance or sale)
Messy File
- Generic income-confirmation letter that does not mention the private facility
- BAS lodgement gap or last quarter still outstanding at submission
- Private facility statement shows missed or late payments in the prior six months
- Private maturity runs past the One Doc term with no exit narrative
- Private interest paid from a personal account or via related-party top-up
- No documented exit pathway, or one that depends on a sale at peak valuation
The messy version is rarely a credit decline outright, but it stretches the file out, brings on conditions, and burns through the borrower's negotiating room on rate and structure. The clean version arrives ready to settle.
How the post-Budget negative gearing regime reads on this file
The 2026-27 Federal Budget tax reform package, announced 12 May 2026, proposed a structural change to how losses on investment property can be deducted. The change is proposed to take effect from 1 July 2027 if legislated, and on the primary Treasury source it lands as a three-bucket regime rather than a binary on or off switch. Each bucket reads differently on a concurrent-carry file.
Bucket one, grandfathered. Properties held before Budget night on 12 May 2026 keep the existing arrangements. The investment property carrying the private mortgage falls here if it was already held at that date. The post-tax carry maths is unchanged.
Bucket two, post-Budget established housing. Established housing purchased after Budget night sits inside a tighter regime, where losses are deductible against residential property income with carry-forward of unused losses to future years, but not deductible against wages or other income. For a self-employed borrower carrying a private mortgage on a post-Budget established purchase, the practical effect is that interest deductions cannot offset trading income from the business, which changes the after-tax cost of the carry.
Bucket three, post-Budget new builds. New builds purchased after Budget night retain full deductibility of losses against other income. A borrower who acquires a new build post-Budget keeps the pre-Budget tax position on that property.
The bucket the underlying property sits in does not change the One Doc serviceability test today, because the test is run on income, not after-tax position. It does change how the carry economics read to the borrower, and it changes the exit-strategy conversation, because the post-tax cost of running the carry for another twelve months is no longer the same across buckets two and three. The 2026 Budget framing here is proposed, not yet law, and the precise legal cut-off (whether contract date or settlement date drives bucket allocation) is pending legislation.
Why the private maturity has to sit inside the One Doc term
The single biggest reason a concurrent-carry file falls over at credit is not income, valuation, or BAS alignment. It is the timing of the private facility's maturity against the One Doc term. The underwriter is reading those two dates side by side, and the private maturity needs to sit inside the One Doc term with a credible exit on a defined timeframe.
Indicatively the exit window is around 12 months from settlement of the One Doc loan, though it varies by lender and by the borrower's overall position. The exit pathway is usually one of two things: a refinance of the private facility back to a bank lender, or a sale of the underlying security. Either pathway needs to be documented on the file rather than assumed, with the supporting evidence (current valuation, comparable sales, broker timeline) attached. The exit strategy is the document that ties the whole submission together.
An exit pathway that depends on a sale at peak valuation, or a refinance that has not been pre-scoped with a bank lender, is treated as no exit at all. The carry then reads as open-ended, and the file slows down. A pre-scoped takeout pathway, with the bank-side application already in early-stage assessment, lands very differently. How private mortgage lenders operate on this point is reasonably consistent across the wholesale-funded segment.
A One Doc home loan with a concurrent private mortgage is a two-file read, not a one-file read. The accountant's letter has to explain the carry, the BAS has to validate trading income, the private facility's maturity has to sit inside the One Doc term, and the exit pathway has to be documented rather than assumed. The post-Budget negative gearing regime, once legislated, changes the after-tax carry maths in three buckets, but it does not change the serviceability test the underwriter runs today. The file that arrives with both halves in deal shape is the file that settles. Reach out if you want the document set scoped against your specific carry.
Key takeaway: scope the One Doc file and the private mortgage exit as one submission, not two parallel applications.Frequently Asked Questions
Private mortgage LVR ceilings vary by lender and security type, landing indicatively around 65 to 75 per cent against standard residential security, with deeper haircuts on commercial, rural, and specialised assets. The ceiling sits inside the wholesale-funded line that a private mortgage lender operates from, not the retail deposit base a bank draws on, so it moves on credit appetite rather than headline rate, and it interacts directly with the LVR the incoming bank will accept on the One Doc side.
The practical anchor for a concurrent-carry file is the combined picture across both properties, not either security in isolation.
A One Doc home loan can be written while a private mortgage is registered against another property, provided the application reads as a concurrent facility serviceability test rather than a single-line file with a surprise debt sitting next to it. The underwriter wants to see the private facility, its balance, its maturity, its repayment record, and a credible exit on a defined timeframe, alongside the BAS-validated trading income that supports the new One Doc commitment.
Done well, the file lands as two facilities in deal shape, not one facility plus a problem.
The accountant's letter for a concurrent-carry file needs to explain the carry, not just state the income. That means addressing how the private mortgage interest is being met from trading cash flow, how the business is tracking against the prior BAS year, and confirming the borrower can service the new One Doc commitment alongside the existing facility.
A generic income-confirmation letter does not give the underwriter what they need on this kind of file. The expanded letter pattern is what we typically prepare with the accountant, and it sits alongside the BAS as the second leg of the income read.
The proposed negative gearing changes announced in the 2026-27 Federal Budget affect a concurrent-carry file structurally rather than mechanically, because the change is proposed to start from 1 July 2027 if legislated and is not yet law.
The Budget regime as announced is a three-bucket arrangement: properties held before Budget night on 12 May 2026 are unchanged with full grandfathering; established housing purchased after Budget night has losses deductible against residential property income only, with carry-forward but no offset against wages or other income; new builds purchased after Budget night retain full deductibility. The bucket the investment property sits in changes how the post-tax carry maths reads, even though it does not change the underwriter's serviceability test today. See the related coverage on refinancing into a One Doc home loan.
The private mortgage exit window needs to sit inside the One Doc home loan term, and on a clean concurrent-carry file the indicative window is around 12 months. The underwriter is reading the maturity date on the private facility against the One Doc term to confirm the carry does not extend past the lender's comfort horizon, with a credible exit strategy either to bank refinance or sale of the underlying security.
A private maturity that runs past the One Doc settlement without an exit narrative is the single biggest reason this kind of file falls over at credit.
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