No Payslips Home Loan
Why do banks ask for payslips?
Almost all banks require payslips in order to assess a loan for approval. This is because payslips provide essential information that the lenders need to take into consideration.
it’s fairly obvious that if a bank doesn’t get payslips then the loan is a much higher risk for them.
The most important reasons why banks believe that payslips are vital documents are:
- Payslips are the most reliable form of verifying someone’s income.
- The lenders are able to see a breakdown of normal, overtime, bonuses and commission income.
- The lenders are able to use your Year to Date (YTD) income to calculate if your current income has been consistent throughout the financial year.
- The lenders are able to see expenses such as tax, HECs, HELP and any debts you’re paying direct from your pay such as salary packaging expenses.
- The lenders can see whether someone is employed as a permanent or casual employee.
What if I don’t have payslips?
It’s common to not receive any payslips from your employer. However this all depends on the type of industry or size of the company that you work for.
For example, many small businesses don’t issue payslips to their employees, especially if payments are cash-in-hand. It could also be the case that payslips are issued, but they are handwritten which means that the banks will not accept them as proof of your income.
In other cases some people receive income on an irregular basis that is very difficult to prove. This usually includes salesmen, casual employees and people who work significant overtime.
How can I prove my income?
There are several ways of verifying your income, as no lenders will accept a loan that is not backed up by some kind of evidence.
Some alternative ways to verify your income are to provide at least one of the following:
- Letter from your employer.
- Group certificate for the most recent year.
- Tax return.
- Bank statements for the last three months which shows regular payments into your account (payments must be very consistent).
All of the above can be used in lieu of payslips, however these are only accepted by a few lenders. If you’re unsure about which documents you can provide, call us on 1300 889 743 or complete our free assessment form and one of our expert brokers will contact you.
How much can I borrow?
The amount of money you can borrow depends on your situation and the type of income verification you can provide.
- Employment letter only: 80% LVR (80% of the property value).
- Group certificate only: 80% LVR.
- Tax return only: 80% LVR.
- Notice of assessment only: 80% LVR.
- Salary credits only: 90% LVR and up to 95% LVR for strong applicants.
- Employment letter AND a group certificate OR tax return OR notice of assessment: 90% LVR and up to 95% LVR for strong applicants.
- No evidence available: This type of loan is no longer allowed due to new legislation (NCCP Act).
Will I pay a higher interest rate?
No! As long as you can provide some form of verification of your income then you can still get an excellent discount on your interest rate just like most other borrowers.
The secret is to choose a lender whose employment verification requirements matches what you’re able to provide.
What if I can't provide any income evidence at all?
If you can’t even provide a letter from your employer then we cannot assist you with a home loan.
My payslips don't meet the bank's criteria!
This is a common reason for people to apply with a lender that doesn’t require payslips.
Below are the standard requirements that payslips must meet before they will be accepted by a lender:
- Must be dated less than four weeks from the date of application (old payslips are not accepted).
- Includes employee’s name, year to date income, pay period details and the employer’s ABN or ACN number.
- Handwritten pay advices or pay envelopes are not acceptable on their own – payslips must be computer generated using an accounting system.
- MYOB or payslips produced from small business accounting software are treated with caution.
- All deductions are to be explained.
What if I don’t have a job?
Unfortunately, we can’t help you get a loan if you can’t prove that you can afford to repay it.
Some people lie to the bank about their employment status. We believe in ethical lending and won’t help you lie to a bank. We do our own employment verification via phone on all customers to identify people who are acting dishonestly so don’t attempt to trick us.
However, we are more than happy to help people who are in a good financial position and are legitimately employed but have a difficult time proving their income.
We can help you once you have started a new job. Some of our lenders only require you to be in your job for one day before they can consider your loan application,
What if you get paid in cash?
Waiters, tutors, valets, bricklayers and many other professions are typically paid without their employer ever issuing payslips.
This is not a problem for them until they apply for a home loan! With no payslips to show, these borrowers are often left high and dry by their banks.
Some lenders have realised this and have introduced new policies on the documentation which they will accept.
Apply for a mortgage
Our mortgage brokers are specialists in helping people who have difficulty proving their income.
Unlike other mortgage brokers, we can quickly work out which lender is the most suitable for your situation. Please give us a call on 1300 889 743 or complete our free assessment form to seek the right professional advice from our experienced staff.