Changes to credit policy

Income calculations

We have recently updated our policy in regard to calculating Allowances

  • Wages or salary income calculations and validation have not changed
  • 80% of Allowances can now be added to gross income if consistent and supported by 2 payslips with same employer for 6 months

This will allow for more positive outcomes in loan servicing to assist with refinances and purchases. When a member has bonus, commission, or overtime and this is relied on for servicing then our normal policy would apply with two pay slips and two PAYG summary to support consistent income.

Allowances

Allowances that are regular and consistent and can be evidenced by two payslips and with the same employer for 6 months are acceptable as standard income and can be used for servicing at 80%

Allowances that fluctuate or reliant from a prior employer are considered less stable forms of income, verification will be required to average over a two-year period, use of this income is shaded at 80% of the two-year average. If calculations are reliant from a prior employer, then use of the allowances may be considered if deemed regular and providing there has not been a material change in role or industry.

Applications seeking to adopt allowances where a change in employer has occurred must be referred to the Credit Department for acceptance.

  • Evidence of consistency can be confirmed via the following:
  • Personal income tax returns
  • Payment summary or group certificates
  • Payslip at the end of financial year detailing year to date payment amounts
  • A combination of the above sources

Non-Standard Income

Bonuses, commissions, over time and any other less stable sources of income may be considered for use and shaded at a maximum of 80%.

These sources of income are generally received as part of employee's performance in a role and can be inconsistent and irregular, in instances where this income is requiring to be utilised to support an application, they must be evidenced by the following:

  • Have been employed in the same job for two years or longer
  • Personal income tax returns
  • Payment summary or group certificates
  • Payslip at the end of financial year detailing year to date payment amounts
  • A combination of the above sources

The use of overtime, bonus or commissions or other less stable income used in calculating servicing must be evidenced and supported as ongoing and consistent over a 2-year period, due to the nature of this income source it can present a higher risk associated with the use of these types of income.