Loan approval

Hey everyone.

I'm new to the forum. I have been reading your posts and find them extremely helpful.

I have a question in relation to loan approval.

I caught a serious flu virus in mid April and took about 2.5 weeks of sick leave. I didn't want to go back to work with any symptoms as there was a lady at work who was heavily pregnant and I didn't want to cause any health risks to her. I was due to go back to work after 2.5 weeks but then I started getting some gastro symptoms. The doctor recommended I stay home. I have been taking unpaid leave as I wanted to save up my annual leave for the next financial year.

During my time off, I have come across a property that I would like to purchase. I have provided the banks with my PAYG Payment Summaries for the last two financial years. They have given me a pre-approval which will allow me to buy this property.

Now that I'm very interested in the property and wish to exchange the contract (by paying 0.25% with 10 days cooling off), would the bank (one of the 4 retail banks) ask me to provide them with my payslips for the last few weeks? If so, those payslips will show I did not have income for those two weeks as I was on unpaid leave. Would this be a problem? (I came across this property by pure chance. If I knew I was going to buy a property, I would have asked for my work to pay me annual leave so that my payslips would show I have income).

My position is that I am due to return to work in two weeks time on same duties and same pay, and the time off was temporary, so it shouldn't be a concern to banks. But I understand the banks have been very conservative in light of the economic crisis.

Has anyone experienced this problem? or know what the bank would most likely do?

Thank you so much in advance!!!
 
Hi Rolfe

Thank you for your response.

I'm asking St George bank for 80% (by using equity in another property).

I gave St George my PAYG Payment Slips for the preapproval and loan/rental documents for my other property. When I asked if they needed anything else, they said no. I genuinely did not think my time off work would be a problem so did not think of bringing it up.

Now I'm serious about the property, my mum raised the issue about my time off work. To think back, I do recall with the last property, another bank had asked me for payslips. So it's putting some doubts in my mind.

I'm worried if I exchange at 0.25%, the bank finds out I had no income for last two weeks (though I'm still on work's payroll and scheduled to return), and deny me the loan. Then I lose my 0.25% :(

Do you think I should volunteer my most recent payslips to the bank (which shows zero income)? or should I wait until they ask for it?

Thanks in advance.
 
I think you could get around this by providing payslips back further, and if needed accompanied by a letter from your employment to back up your claims.
Mind you, I have also heard that the banks are tightening down on their criteria.

I think the criteria used to be 2 weeks payslips from the past two months.....could you do that?

All I can add is good luck and let us know how you get on.
 
Hi Schweedy

Thanks for your reply.

Yes I can do payslips from last two months =) Hope that's enough.

Do you or does anyone else know whether the banks call up the HR departments of employers to confirm employment? and what type of questions they would ask? If all they ask is am I on the payroll, then the answer would be yes.

Thanks again.
 
Hi everyone

I just went on this website re St George mortgages.
http://www.stgeorge.com.au/loans/home-loans/faqs/homeloan-application-checklist.asp

It says instead of giving most recent two consecutive payslips, I can provide

Any two of:

Salary /employment letter from your current employer confirming length of employment, your gross basic wage together with any other components relating to your salary
Most recent employment contract which identifies your name, employer’s name and gross basic wage together with any other components relating to your salary
Latest payment summary/group certificate, tax assessment notice or tax return
Evidence of consistent income amount regularly deposited to your bank account
Latest payslip which identifies your name, employer’s name and your gross and net income.

I can provide an employment contract and latest payment summary. So it should be okay according to their own guidelines.

Will let you know how it goes =)
 
I've never had a bank call up any of my employers. I wouldn't be too worried about that. And they're would be privacy issues with them asking too many questions about you without asking for your prior consent.
 
St George do tend to do employmen verification

I would not sweat

the loan has no LMI risk, and if they do make proper enquiries of ur employerit will show the truth,

ta
rolf
 
Thanks everyone for your input!!!!

Just out of curiosity, does anyone know, once the formal loan process commences (ie: after I pay 0.25% so the bank knows I'm serious), would they request UPDATED payslips?

I'm extremely risk averse. Even though I think it really shouldn't be a problem and taking on board what everyone has said. I feel like mentioning it to the lending manager for peace of mind.

At the same time, I know St George has the most stringent approval process (apparently they are self-insured according to some website) ... so I worry if I do mention it, it may delay the process unnecessarily or cause it to fall through when I could have just kept my mouth shut ...........

Terrible timing .... =S
 
Just out of curiosity, does anyone know, once the formal loan process commences (ie: after I pay 0.25% so the bank knows I'm serious), would they request UPDATED payslips?

We were asked for payslips only once - they were needed for pre-approval (I'm not sure whether the bank called to my company).
But we are not with St George, sorry..

And yes, we were asked for just 2 recent payslips. As I understood they use it to determine your income you generally get.

PS: I just recalled that Pre-approval had some text about that conditions should be met on the approval date etc
 
We were asked for the 2 most recent payslips, and also that those payslips be no older than 2 weeks!!

This is impossible for me, as I only get paid fortnightly, so the older of the 2 payslips I provided was almost a month old. It was no issue.
 
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