Income Verification – How It Impacts Your Loan Application

As lending and qualifying criteria continues to be ever changing, much of the interpretation around income verification is being questioned by lenders off the back of the new regulatory recommendations following the 2018 Royal Commission into Banking Practices.

As brokers, we are constantly being monitored and asked for additional verification of income by lenders to satisfy these recent changes. This can be quite tricky at times, especially as no two lenders have exactly the same income verification process.

As an example;

  • Lender A is happy to receive two proper system-generated payslips, as long as they show the current YTD amount, date range, hourly rate, minimum hours worked, applicant’s name, ABN number of the employer, all pre/post-tax deductions, Super Fund and Bank Details where the salary is being paid into
  • Lender B however requires all the above, plus the last 90 days banking transactions showing the income being paid into the applicant’s bank account
  • Lender C requests all of the above, plus a copy of the employment contract outlining conditions of employment 
  • Lender D requires a combination of all the above, however will still not proceed with your application until they make a verification of employment call to your employer…..

In this case, the verification process often falls apart or the loan application approval is unnecessarily delayed. A savvy employer’s pay master will not divulge any information about an employee without written permission from said employee first. And we never know if the lender is actually going to make such a call as they are often random. So what does the lender do? They decline the application due to inability to verify income!

The moral of the story is that in all of the above cases, the applicant must be prepared to provide their broker/lender what the nominated lender requires to verify income if they wish to gain approval on their loan application. And hand-written payslips just don’t cut it!  Essentially, banks are being extra cautious, trying to mitigate the risks involved with lending money to an applicant that may lose his/her job some time in the future - a possibility that applies to any PAYG borrower… how crazy is that?

Confused? ……. This is where an experienced broker can lend some clarity and assist you in ensuring all income verification requirements, as well as any other criteria related to your loan application are being met

Please feel free to give me a call on 0438 041 111 to organise a confidential discussion about your pending home loan application and how we may be able to help.

As always, enjoy life, work hard, play safe and remember that we are always here to help you
 
‘Take the Confusion Out of Lending’ 

All the best

Peter Vinci - 0438 041 111