Employed | Accountant | Rental Reference | Gift | Default

Employed

If you are employed PAYG, you will need to provide a letter from your employer.

The Employment Letter should

  • Be on a company letterhead
  • contain the company’s contact details
  • show the company’s ABN
  • be dated
  • be signed
  • show the name and the position of the company who signed the letter
  • show the name of the employee (who is applying for the home loan)
  • show the gross income, the duration of employment ,if the employee is still on probation or not, the type of employment (permanent, temporary, part-time ,casual or full-time etc)
  • if applicable-anything further that may be of interest to the bank.
  • This letter can be faxed in most cases, however some banks require the original or require the mortgage broker to hold the original.

 

Your employer can use this sample letter as a template. Just amend dates, names etc and send the completed letter back to us.

 

Employment letter

25 August 2015

Re: Employment of David White

We here with confirm the following details regarding David White’s employment  with XYZ Pty Ltd.

Mr David White’s gross salary is $75 000 per annum

His net salary is $57 578.00 per annum.

He is employed on a permanent  full-time basis and is not on probation.

David White has been working for XYZ PTY LTD since the 1st March 2012.

Should you require any further information, please do not hesitate to call our office on 1300 111 222

Regards

(Signature)

John Johnson

Manager

XYZ PTY LTD

Accountant

If you are self-employed you may be asked to provide a letter from your accountant

The Accountant Letter should

  • Be on your accountant’s letterhead
  • Show your accountant’s contact details
  • Show the accountant firm’s ABN
  • Included details of professional memberships, eg CPA
  • Be dated
  • Be signed
  • Show the name and the position of the person signing the letter
  • Should confirm that the accountancy firm acts as accountants for the company or the individual applying for a loan.
  • A disclaimer to protect the accountant from any legal action is common.
  • This letter can be faxed in most cases, however some banks require the original or require the mortgage broker to hold the original

 

Your accountant can use this sample letter as a template. Just amend dates, names etc and send the completed letter back to us.

 

Accountant letter

25 August 2015

Re: David White and Black & White Marketing Pty Ltd

We can confirm the following details in regards to Mr David White and his company Black and White Marketing Pty Ltd.

We act as accountants for both entities, Mr David White and for Black and White Marketing Pty Ltd.

We further confirm that Black and White Marketing is trading at a profit and is able to pay its all current liabilities.

This information is true to the best of our knowledge and has been confirmed from enquires with our client and our own records.

Should you require any further information, please do not hesitate to contact our office on 1300 333 888.

Regards,

[choose a block of text from section below to add as needed]

(Signature)

Mary Jones

Jones& Jones  Accounting Pty Ltd

 

Other types of accountant’s letters

A lender may want to clarify a particular point on your application. For this reason, we have put together some common accountant’s letters below.  Please just add these to the main accountant’s letter above.

Please note, some lender may be able to supply their own accountant’s letter template for you to use.

 

Business is not trading

We can confirm to the best of our knowledge that XYZ Pty Ltd is no longer trading and has no outstanding liabilities.

 

Explaining One- off expenses:

We can confirm XYZ Ltd Pty has had a bad debt during the last financial year 20134/14 and were forced to write this off. This was a one-off event and unlikely to occur again due due to a change in XYZ’s company policy.

 

One- off expenses and probable add-back

We can confirm XYZ Ltd Pty has had to purchase two vehicles during the last financial year 20134/14. This was a one-off event and unlikely to occur again in the next 5 years. It would be appropriate to add back this expense when calculating our client’s ability to service the loan he applied for.

 

Explanation of increase in income due to the previous year being the start-up year with start-up expenses.

The profit achieved by XYZ Ltd Pty has significantly increased between the financial years 2013/14 and 2014/15. This because the year 2013/14 was the ‘start-up’ year and profit was reduced by start-up costs as well as by having to establish a customer base. The financial year 2014/15 is far more representative of normal future earnings and therefore the profit in 2014/15 should be used when assessing my client’s borrowing capacity.

 

New business is in the same industry as the client’s previous job.

We can confirm that David White was previously employed as a marketing consultant for over 10 years and is now operating his own business in the same industry. David’s business has only been running for 1 year and has already generated a sizable income and also is establishing a loyal customer base. Recently lodged BAS as well as business forecasts indicate that David’s business should expect a similar or higher income than this financial year, 2013/14.

 

ABN Contractor with no major expenses

We can confirm that David Smith is operating as a sole trader/ contractor and works for one company only. David is paid a daily rate and has no major expenses such as staff, equipment or rent that other types of business have. For this reason it may be reasonable to assess his income in a similar way to the income of someone who is employed on a PAYG basis.

 

Change of ABN or change of business structure

We can confirm that Black & White Marketing Pty Ltd is the same business that was previously trading under David White’s sole trader ABN. Although Black &White Marketing is a new entity, the business is essentially the same. David has been self-employed is the business for over 5 years, 4 years under his sole trader ABN and 1 year under the new ABN. For this reason, it would be reasonable to assess these 2 entities as the same business when assessing the loan application.

 

Confirmation of Loan Purpose

We can confirm that to the best of our knowledge David White will be using the funds released by the loan to invest in his business to upgrade the business premises and computer equipment.

 

Explanation of Discretionary Trust distributions

We can confirm the David White is the sole director and also the sole shareholder of the XYZ trustee company and also the appointer for his discretionary trust. David has full control of the past, current and future distribution of income from the trust. .This financial year, he has chosen to distribute income from the trust to his wife and his mother in order to reduce his taxable income.

 

Low-Doc loan application accountant letter, confirming income

We can confirm that we have acted as accountants and tax agents for the above mentioned entities, David White and Black & White Marketing Pty Ltd. Our client is involved in the digital marketing industry. We can further confirm that the income stated by the loan applicant, David White, on the self-certification form of $120 000 per annum is net profit, after all expenses but before the deduction of income tax. The amount stated is in line with the previous year’s income level. If you require further information, please do not hesitate to contact our office.

 

Rental Reference

You may need this if you are borrowing 95% of the value of the property. You can contact your property manager (from a real estate office) and they can supply you with both, a rental reference letter and a rental ledger. The reference letter is more a statutory declaration and explains that you are a good tenant regarding your payments and general keeping of the rental property. The ledger is a statement of the actual amounts of rent paid and the dates they were paid. Only give the bank what they ask for, not more. You may not even need a rental reference letter if you have genuine savings or a 10 percent deposit or more. The letter has to be from a registered real estate agent/office to be valid. If you can’t supply one, you may need additional proof of rental payments.

View letter templates for your situation by clicking the applicable tab below.

Rental reference letter templateRental income letter (for your investment property)Rental income template (not currently rented)Rental income template (currently rented)

Please amend name, dates etc.

25 Aug 2015

Re: Rental reference for David White

We can confirm the following information:

  • Tenant name : David White
  • Rental property address: 12 Baker Street, Brisbane, Qld 4000
  • Commencement date of lease: 01 Jan2013 to present
  • Current rent: $500 per week ( paid fortnightly)
  • Payment history: All payments have been on time during the past 12 months.
  • The property is being kept in good condition

Should require further information, please contact the office on 07 3333 2222

Regards,

(Signature)

Michelle McMaster

Property Manager

1 Station Road, Brisbane, Qld 4000

Use this letter to prove your rental income. Please note that there are large differences in the way different banks assess rental income and as a result, there is some variation as to how much different banks are willing to lend to investors. As a general guide your letter should contain the following:

  • Be dated
  • Be signed
  • Confirm your full name
  • Confirm the address of the rental property
  • Confirm the current rent or the estimated market rent if unrented
  • Include the name of the person who signed the letter and their position
  • The name, contact details and ABN of the real estate office
  • The letter should be on a company letterhead from the real estate office

Please amend dates, names etc as required before sending the completed letter to us.

25 August 2015

Re: Potential Rental income of 5 Mount Street, Brisbane, Qld 4000.

Further to our inspection of the above mentioned property, we can confirm the following market appraisal for rental purposes.

In the current rental market, the above property, located at 5 Mount Street in Brisbane, would be able to achieve rent in the vicinity of $550 per week. This assessment is based on a market comparison report of recent comparable rents in the immediate area.

If you require further information, please do not hesitate to contact our office on 07 555 666.

Regards,

(Signature)

Michelle McMaster

Property Manager

1 Station Road, Brisbane, Qld 4000

Please amend dates, names etc as required before sending the completed letter to us.

25 August 2015

Re: Current Rental income of 5 Mount Street, Brisbane, Qld 4000.

We are the managing agents for the above mentioned property.

The property, located at 5 Mount Street in Brisbane, is currently rented at $550 per week, which we believe is a fair market rent of this type of property in the area. This assessment is based on a market comparison report.

If you require further information, please do not hesitate to contact our office on 07 555 666.

Regards,

(Signature)

Michelle McMaster

Property Manager

1 Station Road, Brisbane, Qld 4000

 

Gift Letter Templates

Normal/ standard gift letter template used by most lenders:

Rental reference letter templateStatutory declaration letter templateGift as a LoanGuarantor support letter

Please amend names, dates etc and then send the completed letter to us.

25 August 2015

Re: Loan Application for David White

I confirm that I am giving my son, David White, an unconditional gift of $ 60 000 to buy a property. This gift is not repayable nor refundable.

Should you require any further information, please do not hesitate to contact me on 07 1111 2222.

Regards,

(signature)

John White

111 Main Street,

Brisbane, Qld 4000

If the letter has specifically requested a ‘statutory declaration’ letter regarding your gift, you can use this letter. Just amend the dates, names etc. Please note that some banks have their own statutory declaration letter they would like you to use.

25 Aug 2015

I, John White, of 111 Main Street, Brisbane, Queensland, do solemnly and sincerely declare as follows:

I will give my son, David White, the total sum of $60 000 to assist him with the purchase of a property. This gift is unconditional, non-repayable and non-refundable.

I am making this solemn declaration conscientiously, believing the said declaration to be true and by virtue of the provisions of the Oaths Act, 1900 (as amended)

Subscribed and declared at Brisbane, Qld,

Dated 25 Aug 2015

(Signature)

John White

Signed before me

(signature)

Name of witness…………….

Position of witness…eg.JP………..

If the gift is repayable ( a loan), this is assessed as a borrowed deposit by the banks/lenders. Just a couple of lenders will accept a borrowed deposit. Please use this template and amend names, dates etc as applicable and return the completed letter to us.

25 Aug 2015

Re: Loan application for David White

I confirm that I am advancing a loan to my son, David White, to assist with the purchase of a property. The details of this loan are as follows:

1) Loan amount $60 000.

2) No interest is payable

3) Repayments of $1200 per month

4) The loan will be secured by a caveat on the property. OR The loan will be unsecured.

Should you require any further information, please do not hesitate to contact me on 07 1111 2222.

Regards,

(signature)

John White

111 Main Street,

Brisbane, Qld 4000

If your parents are able and happy to use a property they own as additional security for your loan (the applicant), then please use this guarantor letter template that confirms they understand the implications of being a guarantor. Please amend names, dates etc and all guarantors must sign the letter. Then send the completed letter to us.

 

25 Aug 2015

Re: David White

We would like to act as guarantor and are willing to use the equity in our property as additional security, so our son, David White, can obtain finance to purchase a property.

Should you require any further information, please do not hesitate to contact us on 07 1111 2222

 

Regards,

(signature)

  • John White

(signature)

  • Mary White

Both of 111 Main Street, Brisbane, Qld 4000

Default

Shared bills with a partner or flat mate:  At my previous address I rented with a flat mate and we had the lease and utilities in both of our names.  I later moved out of the property however I was unaware that I was still liable for the utility bills.  Later I tried to apply for a credit card and was knocked back due to a default on my credit file.  It was only then that I found out that my previous housemate had not paid the electricity bill.

Divorce:  My husband and I divorced in late 2009.  I left with the children and moved to my mother’s house until I could find new accommodation.  All of the utility bills were still being sent to my previous home address, and were not paid by my ex-husband.

Overseas:  I went to the UK on a working holiday for two years.  Before leaving I informed my credit card provider of my departure and asked them to mail my statements to my parents address.  My credit card provider never changed my address and was unable to contact me so lodged a “clearout” default on my credit file.  When I returned and found out about the unpaid bill I contacted them and immediately paid the outstanding balance.

Change of address:  In late 2009 I moved to a new address and informed my internet provider of my new contact details.  Despite connecting my internet to this new address they were still sending bills to my previous address.  The account went unpaid and they lodged a default on my credit file without notifying me.

Dispute:  My mobile phone carrier charged me for calls made to a foreign country using my mobile phone.  These calls were not made by me and I have no reason to call anyone overseas.  After numerous attempts to find out why they charged me for these calls I was unable to come to an agreement with them so refused to pay the bill and they consequently lodged a default on my credit file.  I am now following up this complaint with the telecommunications ombudsman.

Payment not found:  I paid my January phone bill over the counter at the post office.  Unfortunately the money was never received by my phone carrier and as a result a default was lodged in my name.

Did not contact:  My conveyancer failed to lodge my new address with council after my purchase of a new property.  Consequently council rates were never paid and council lodged a default on my credit file.  They never once contacted me before lodging a default and I am now in the process of challenging this.  The amount owing was paid immediately after we discovered this unpaid bill.

Incorrect direct debit details:  I recently switched from ANZ to CBA and informed my local gym of my new account details.  They never updated this system with the correct account number and so consequently my bill went unpaid.  As a result of this the gym lodged a default on my credit file.  This bill has since been paid.

Closed account:  I recently cancelled my phone contract and returned the phone to my provider.  Unfortunately the local store never actually closed my account and bills were continuously sent to my address which I ignored as I thought they were an error.  They lodged a default on my credit file and I have since lodged a complaint with the telecommunications ombudsman.

Business failure:  My husband and I had a small business that was part of a larger franchise group.  The head franchise group went into liquidation and as a result we were forced out of business.  The cost of setting up our business has left us with numerous debts that we were unable to pay.  We have since returned to our previous jobs and have repaid our debts however the experience has left defaults on our credit file.

Temporary unemployment:  I was living in a country town that heavily relies on the mining industry.  The local mine closed which had disastrous effects on the entire town’s economy which caused me to lose my job.  I was unable to find work in the town for over 6 months and despite my best efforts a default was lodged on my credit file.  I have since moved to a major city, have stable employment and have paid my outstanding bills.

Pregnancy / new baby:  In late 2009 I became pregnant and was unable to work for over 6 months.  My partner and I had separated just before I found out about the pregnancy and so I was without financial support during this time.  As a result a default was lodged on my credit file.  I have since returned to work and have repaid all of my outstanding bills.

Pay date:  My pay date falls on the 15th of the month however my home loan is due on the 13th of the month.  As a result almost every one of my home loan repayments is late by a few days.  I intend to set up my new home loan with a payment date of the 17th of the month to make sure this problem does not occur again.

Confusing home loan accounts:  My current home loan is set up so that payments can only be made from a bank account with the same lender.  I did not know this and moved my everyday cheque account to another bank.  I gave the bank my new direct debit details however they could not process the request.  When I tried to make a manual payment to my loan I found out that my lender did not accept BPay or EFT payments so I was forced to go into the branch and pay cash each month.  Because of this inconvenience I have had great difficulty making my repayments on time.

Bad advice:  I had had several large unexpected expenses which forced me to use up almost all of the available funds on my credit cards.  I was able to make repayments, however it was a struggle.  A friend of mine recommended that I talk to a debt relief organisation that recommend that I enter into Part X agreement with my creditors.  It was only after entering into the agreement and the Part X being listed on my credit file did I find out that I had almost no benefit to do so and was charge high fees to negotiate this agreement.  Nonetheless, I paid my debts in full over the next year and I am now debt free.