Letter Of Employment For A Mortgage
Whether you are a first time homebuyer or a seasoned homeowner, you need to be ble to write an effective employment letter for your mortgage application. An employment letter for mortgage is a document that confirms your current employment status, income, and job stability, and is used by lenders to assess your ability to make mortgage payments. It is an important part of the mortgage application process and can significantly impact your chances of approval.
Writing a employment letter can be complex. You need to include all your relevant information and convey them in a professional tone.
What is a letter of employment?
A letter of employment is a document that shows someone’s current job status. It’s usually given by the employer to the employee when requested. The letter includes information such as the employee’s job title, start date, salary, and employment type (full-time, part-time, or contract). It’s used to prove job stability and income, and may be required in situations like applying for loans or renting apartments.
What is the purpose of an employment letter for your mortgage?
Mortgage lenders typically mandate that your employer provide details about your employment status to evaluate your job stability and verify your application. It especially allows banks to determine whether you have the regular income required to make the mortgage payments or not.
What should it include? Essential requirements for your employment letter for a bank
The letter must include things such as job title, salary, years of employment, and more. Your employment letter when you’re applying for a mortgage should include the following essential requirements:
- Letterhead and signature: The letter should be written on an official company letterhead and signed by an authorized representative of the company.
- Contact information: The letter should include your employer’s contact information, such as the company name, logo, address, and phone number, so that the bank can verify the information.
- Dates: The employment letter should be current and include the date it was issued. It should be no older than 60 days.
- Verification of employment: This confirms that you are currently employed and the duration of your employment.
- Job title and salary: This information is needed to determine your income and ability to make loan payments.
- Employment type: Banks want to know if you are a full-time or part-time employee, or if you are a contractor.
- Length of employment: This is important because banks want to see that you have a stable job and are likely to continue to receive an income.
- Additional clarifications: Banks may sometimes require additional information about your employment as a condition for approving your home loan. However, due to privacy laws, your employer may not be able to directly communicate with the bank. In this case, you can request your employer to provide a letter to the bank. There are a several clarifications that the bank may ask for, some of which are listed below:
- Pay deductions
- Overtime income
- End of probation period
- Changes in income
- Year to date income
- Employment stability
- Maternity or Paternity leave
- Employment probation
- Seasonal pay fluctuations
- Self employer contractor
The bank evaluates your employment letter to assess your ability to repay a loan and make a decision on your loan application.
Get a free Australian mortgage assessment today.
How to create an effective letter of employment confirmation
Now that you have a comprehensive understanding about the letter of employment and its purpose towards your mortgage application, we can finally get started on how you can write one for yourself.
We have created a letter of employment confirmation template for you. All you have to do is download the template, send the sample letter to your employer to amend the informations about your job, include their letterhead, relevant name and signature and fax it back to you. Once you receive the letter, proofread the letter for all the requirements we talked about earlier.
Letter of employment template
Here is the letter of employment confirmation template for your mortgage loan application:
[Your Company Letterhead]
[Date]
Dear Sir/Madam,
We are writing to confirm that [Employee Name] is an employee of [Your Company Name] and currently holds the position of [Job Title] with our organization. Their employment commenced on [Start Date], and they are based at [Work Location].
They are hired as [permanent/ contract] worker.
[Employee Name]’s starting salary is [Salary], and they are paid on a [Weekly/Monthly] basis.
Only if the employee was paid bonus in the last 2 years:
The [Year] discretionary bonus was paid in [Month/Year] and for [Bonus Amount].
The [Year] discretionary bonus was paid in [Month/Year] and for [Bonus Amount].
[Employee Name] also entitled to the below benefits (delete if not applicable):
- Housing Allowance of [Amount] per [month/ year]
- Living Allowance of [Amount] per [month/ year]
- Education Allowance of [Amount] per [month/ year], and this is paid per dependent. The max number of dependent covered by us is [number]
- Any other allowance if applicable
If you require any further information regarding [Employee Name]’s employment with our organization, please do not hesitate to contact us.
Sincerely,
[HR Name]
[HR Position]
[Your Company Name]
Other employment confirmation template samples:
We have also created several other templates for different scenarios where the bank might request you additional clarifications. You can download the other employment confirmation samples here:
What if I’m self employed?
For self-employed contractors, you can download the template here.
If you’re a sole trader, in a partnership or operate via a company and unable to prove your income through traditional means, alternative options are available. You may provide older tax returns, Business Activity Statements (BAS) or an accountant’s letter for a low doc loan.
For more assistance, please contact our sister company, Odin Tax. Our experienced tax advisors at Odin Tax can help you understand the complex rules and regulations involved in this process and provide practical solutions tailored to your unique situation.
Will the bank accept employment letters from a foreign company?
The acceptance of employment letters from foreign companies for mortgage applications depends on the bank’s specific requirements and policies.
- Some lenders may accept confirmation of employment from overseas companies if it’s in an acceptable format.
- Lenders may request additional documentation such as payslips, bank statements, tax returns, and employment contracts to verify income.
- The specific requirements for verifying income may vary from lender to lender.
At Odin Mortgage, we can assist you in your quest to apply for a mortgage. If you’re seeking assistance with verifying foreign income or obtaining an employment confirmation letter for your mortgage application, our expert brokers can help you connect with the right mortgage lenders from our selected panel.
Our brokers possess specialized knowledge and resources to help guide our clients through the mortgage application process and facilitate the verification of their income.
Get a free Australian mortgage assessment today.
Frequently asked questions
To get a letter of employment for a mortgage, speak to your employer and provide necessary details such as the lender’s name and specific requirements.
Wait for the letter, review it for accuracy, and submit it to the lender. The letter should include your job title, start date, employment status, and salary, be on company letterhead, and signed by an authorized representative.
As mentioned above, the employment letter should be recent and include the date it was issued. It should be no older than 60 days.
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