Speed up your home loan application process by ensuring that you tick all the right boxes when providing your employment letter to the bank.
An employment letter is a document provided by your employer that confirms your current employment status and income stream. Along with an employment letter, banks may also require you to provide documentation or proof of your income, which could include:
- Recent payslips
- Tax returns
- Group certificates
Generally, the letter of employment is needed to verify your income.
What does an employment letter look like? Copy the below letter to use for your home loan.
ABN: 1000 XXXX XXXX
1/X George St, Sydney 2000 NSW
Re: Laura Annette Baxley
To whom it may concern,
I am writing this letter to verify that Laura A. Baxley is currently employed with XYZ Pty Ltd as a Digital Marketing Manager. She has been employed with us for three years and two months, and she is on a two-year full-time fixed contract.
Laura is a hard-working, reliable and honest employee.
Her gross salary is $85,000 and her net salary is $72,480. Laura A. Baxley’s position is in high demand.
Should you have any questions, please do not hesitate to contact me on 0461 XXX XXX.
Human Resources Manager
XYZ Pty Ltd
Why does a lender need an employment letter?
When you apply for a mortgage product, the lender will need you to supply evidence of your employment status and income. This information is needed to verify that you earn sufficient income to meet the mortgage repayments without enduring financial hardship.
The bank may need to verify your employment to ensure that you are unlikely to default on the loan.
What needs to be included in the employment letter?
Most Australian lenders have unique requirements for employment letters, so ensure that you consider the following:
- Employer information. Most lenders require your employment letter to be issued on an official company letterhead that contains the company’s Australian Business Number (ABN), address, logo and contact details.
- Employment status. The letter should contain information about the applicant’s employment status (full time or part time), position title, length of employment and financial remuneration (such as salary package or hourly wage). It must also specify the exact gross and net income.
- Employee character details. While this is not mandatory, most lenders like to see that your current employer can vouch for qualities such as reliability, honesty and integrity.
- Job security. It may also be a good idea to ask your employer to include a statement about your job security and the likelihood that you will continue to be employed with the company for the foreseeable future.
- Formatting. Australian lenders require the letter to contain the formal name of both the employee and the employer. The letter should also be dated and signed correctly. In some cases, the lender may require a witness signature from a third party or a Justice of the Peace (JP).
Can I provide my lender with a faxed copy or does it need to be the original?
This will vary depending on the lender’s individual policies and eligibility requirements, but most lenders will accept a faxed copy of the employment letter.
How recent does the employment letter need to be?
Most lenders require the employment letter to be no older than 60 days from the date of receipt.
What happens if I don’t issue an employment letter to my lender?
An employment letter is a requirement for many home loan products on the market. If you fail to provide your lender with a recent employment letter that satisfies their guidelines, you may not qualify for the home loan.