Employment Letter

Any general questions you might have in regards to loans and finance.
hunterxiao911
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Joined: Mon Sep 28, 2009 1:51 pm

Employment Letter

Postby hunterxiao911 » Tue Feb 09, 2010 6:56 pm

Hi, OTTO

I am ongoing contract with my recruitment agent at moment and work for another employer (agent's client)!

My payslips is issued by agent and under their name!

Now, my mortgage loan bank want me provide employment letter, I just wondering

1. The employment letter should be issued by my current employer or my agent?

2. Can I convert agent hourly rate into gross income on the letter?

3. Is it compulsory mentioned permanent or probationary issues on the employment letter as I am not permanent staff of the employer yet!


Thank you

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Otto Dargan
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Re: Employment Letter

Postby Otto Dargan » Tue Feb 09, 2010 9:19 pm

The letter would need to come from the recruitment company as they are technically your employer, not the company that you are currently assigned to.

The best way to state your income on your employment letter is for example $50 / hour for 40 hours each week plus overtime as required. Lenders would then use 50 x 40 x 48 = $96,000. Any lender that knows what they are doing (and there are plenty that do not) will use 48 weeks income not 52 so as to allow for unpaid holidays / sick leave. it doesn't hurt to ask the employment agency to mention that "He is an excellent employee and we expect him to continue working with us for the foreseeable future".

If the letter does not confirm your employment status (e.g. Permanent / contract etc) then your bank may ask for another one. They can see on your payslips that there is no annual leave etc so they usually know right away that you are either employed as a casual or contract employee.

Be very careful! Many lenders do not like contractors at all and will decline your loan unless your employment contract has a minimum of 12 months to run. I would strongly recommend that you call me on 1300 889 743 to discuss this before you proceed. I'm here to help and if you are going with a lender that can help you then I will let you know. If not then I can assist you to apply with another lender.
Otto Dargan
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hunterxiao911
Posts: 9
Joined: Mon Sep 28, 2009 1:51 pm

Re: Employment Letter

Postby hunterxiao911 » Wed Feb 10, 2010 5:50 pm

Hi, Otto

Many thanks for your great help

I just asked my recruitment agent issue a employment letter today as per your advice!

But, here is the letter they issued:


We confirmed the following details regarding James's employment with us:

He is employed as accountant on a contract basis through hudson at *** company

His salary is xxx dollar for 37.5 hours each week plus overtime as required

He is employed on a full time basis

He started work with our client on 13/10/2009

We have received excellent feedback from our client about james and we expect him to continue working with us for the foreseeable future!

Should you have any additional information please do not hesitate to contact us on 12345678
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I am just wondering is it affect the my home loan application if my agent mentioned about " a contract basis through hudson at *** company ". As you said, most lenders do not like contractor at all!

Another issue is this letter does not mention about my employment status (just mention I am full time basis), from your point of view, lender will request another one in this case!

Now, I have talked to my agent if it is possible for them to modify above 2 issues, but they said this is the standard letter template they used for most of their contractors!

I am just wondering if this employment letter is safely enough to go through the loan approval ? Do you have any suggestion to improve this letter?

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Otto Dargan
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Re: Employment Letter

Postby Otto Dargan » Wed Feb 10, 2010 6:01 pm

That letter would be accepted by some lenders and rejected by others. Overall it is quite good. Certainly Westpac and St George would reject the letter however they are not good with contractors anyway so hopefully you are not applying with them. I'd strongly recommend that you give us a call because we do several loans for contractors every week at market leading rates, there are no fees for our services as we are paid by the banks. Applying for a loan and getting declined reduces your chances of getting a loan from another lender as it reduces your credit score significantly.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

hunterxiao911
Posts: 9
Joined: Mon Sep 28, 2009 1:51 pm

Re: Employment Letter

Postby hunterxiao911 » Wed Feb 10, 2010 9:01 pm

Unfortunately we went through westpac already!

We bought the land and land loan is through westpac, now we are applying the construction loan to build our new house!

The land loan is under my wife's name only, now we are going to apply construction loan under both of our name! But as you said, westpac will probably decline our application because I am contractor!

So, otto, is any other solution for us to get construction loan from westpac?

Thank you

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Otto Dargan
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Re: Employment Letter

Postby Otto Dargan » Thu Feb 11, 2010 8:23 am

It is highly unlikely that you will get approval. Westpac's agency employed / contractor policy is that two years tax returns are required, they average the income received over those two years. If <2 years in current employment then the application is outside of policy. Generally they would be declined. If you borrow >80% of the property value then your loan is subject to LMI and the loan would be almost certainly declined.

We could refinance to another lender that accepts agency employees as long as they have been in their job for at least one day and that their income can be confirmed.
Otto Dargan
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P | 1300 889 743
Home Loan Experts


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