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What do home loan lenders look for on your pay slip?

When you apply for a home loan, you’ll need to provide pay slips – but not all pay slips are created equal.

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Filling out paperwork

During the home loan application process, you’ll have to provide your lender with a range of documentation. Your lender will be particularly interested in verifying your current income and employment. Lenders do this by asking for pay slips.

Your pay slip will provide your lender with a wealth of information. Not only will they be able to see your income, they’ll also be able to verify your employment status, employment type and the stability of your income.

How many pay slips do lenders need?

Your lender will want your two most recent consecutive pay slips. The pay slips shouldn’t be older than six weeks, unless you’re paid monthly.

You may have to provide more pay slips if your pay varies significantly from one pay period to the next. For instance, if you regularly receive overtime pay, you may need to provide additional pay slips or even your group certificate. Likewise, you might need to provide more pay slips if part of your pay is in the form of bonuses or commissions.

What information do lenders look for?

When they’re assessing your pay slip, a lender will look for a number of details. If these details aren’t present on your pay slip, you may have to provide additional information.

  • Your employer’s name
  • Your employer’s Australian Business Number (ABN)
  • Your gross year-to-date (YTD) income
  • Your net income
  • Any deductions, such as superannuation, salary packaging or HECS or HELP debt
  • Your annual leave to confirm you’re a full-time employee

What if my pay slip doesn’t have these details?

The way pay slips are formatted and distributed can vary from one employer to the next. Many employers choose to distribute pay slips online or via email. This can lead to slightly different formatting, with some details being omitted. If this is the case, ask your employer for a hard copy of your two most recent pay slips and explain the information they will need to include.

Some employers provide handwritten pay slips or produce pay slips using spreadsheet software such as Excel. Most lenders won’t accept these, and you may need to provide alternative documentation of your income.

Moreover, not all employees receive pay slips. If you’re a contractor, are self-employed or are paid cash in hand, you’re unlikely to receive pay slips. If this is the case, you’ll have to provide alternative documentation. You may even need a special type of home loan, known as a low-documentation or low-doc loan. Not all lenders offer low-doc loans, so you’ll need to verify that your lender allows alternative forms of income verification.

Learn more about home loans for self-employed borrowers

If you don’t receive a pay slip, the following are some alternative forms of income verification:

  • An accountant’s letter
  • A letter from your employer (here's a template you can use)
  • Your most recent group certificate
  • Three months’ worth of bank statements
  • Your most recent tax return
  • Your Business Activity Statement (BAS) if you’re self-employed

For most borrowers, proving your income is a fairly straightforward process. However, if your pay slips don’t provide your lender with the proper information, you could find your application sidelined. Before you apply, make sure you can provide your lender with the income information they are looking for.

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