Proving Income Post-Separation

After separation, proving your income to lenders becomes more complex but is crucial for securing home loans. This guide covers everything you need to know about income verification in your new circumstances.

Essential Documents for PAYG Employees

Recent Payslips

• Last 2-3 months of payslips required
• Must show year-to-date figures
• Include any overtime, bonuses, or allowances
• Ensure payslips are from your current employer

Employment Letter

Your employer must provide a letter stating:

• Your current position and salary
• Employment start date
• Whether your position is permanent, contract, or casual
• Any probationary period details
• Contact details for verification

Group Certificates/Payment Summaries

• Last 2 financial years required
• Shows total income and tax withheld
• Helps lenders assess income stability
• Essential for tax return verification

Bank Statements

• 3-6 months of salary credit entries
• Must match payslip amounts
• Shows consistency of income
• Reveals any irregular payments or gaps

Tax Returns

• Last 2 years if available
• Helps verify declared income
• Shows any additional income sources
• Required if you have investment income

Self-Employed Income Verification

Tax Returns with Notice of Assessments

• Last 2-3 financial years required
• Must be lodged with ATO
• Notice of Assessment proves ATO acceptance
• Shows adjusted taxable income

BAS Statements

• Last 4 quarters minimum
• Shows business activity and GST obligations
• Demonstrates business cash flow
• Quarterly or monthly statements accepted

Profit & Loss Statements

• Current financial year prepared by accountant
• Must be prepared by qualified professional
• Shows business performance trends
• Reconciles with BAS statements

Bank Statements

• Business accounts: 6 months minimum
• Personal accounts: To show drawings/salary
• Must show business income deposits
• Demonstrates cash flow management

Accountant's Letter

• Confirms business income and viability
• States accountant's professional opinion
• Includes contact details for verification
• May project future earnings

Business Registration Documents

• ABN registration certificate
• Business licenses where applicable
• Partnership agreements if relevant
• Company registration if incorporated

Child Support Documentation

Child support can significantly boost your borrowing capacity when properly documented:

Court Orders

• Family Court orders specifying child support amounts
• Binding and enforceable agreements
• Shows legal obligation for payments
• Provides certainty for lenders

Child Support Agency Statements

• Payment summaries for last 6-12 months
• Shows collection and disbursement history
• Indicates payment reliability
• Available online through myGov

Bank Records

• 6 months of child support deposits
• Must match CSA or court order amounts
• Shows consistency of payments
• Includes any additional voluntary payments

Private Arrangements

• Statutory declarations from both parties
• Bank transfer records showing regular payments
• Written agreements between parties (though less weight than court orders)
• Evidence of payment reliability

How Child Support is Assessed by Lenders

Income Recognition Rates

• Up to 100% of child support can be counted as supplementary income
• Most lenders count 80-100% of verified child support
• Must demonstrate payment reliability for 3-6 months minimum
• Some lenders more conservative, counting only 70%

Duration Considerations

• Age of children affects loan assessment
• Payments ending within 2-3 years may be discounted
• Longer payment periods receive full recognition
• Consider impact of children reaching 18

Reliability Requirements

• Consistent payment history essential
• Missed payments reduce lender confidence
• Court-ordered payments given more weight than private arrangements
• CSA collection provides additional security

Employment Verification Process

Direct Employer Contact

• Lenders contact HR department directly
• Verify employment details and salary
• Confirm permanency and probation status
• May check employment history

Verification Requirements

• Employment start date confirmation
• Current salary and benefits verification
• Job security and future prospects discussion
• Any upcoming changes to employment

Documentation Standards

• All documents must be recent (within 30-60 days)
• Original documents or certified copies
• Clear, readable copies without alterations
• Professional letterhead for employment letters

Centrelink Income Documentation

Income Statements

• Last 26 weeks of payment history
• Shows payment amounts and frequency
• Includes any penalties or adjustments
• Available through myGov online

Centrelink Letter

• Confirms your current payments
• States payment rates and frequency
• Includes any review dates or changes
• Must be recent (within 30 days)

Types of Payments Lenders Consider

• Family Tax Benefits: Often counted as income
• Parenting Payments: May be counted with restrictions
• Disability Support: Counted if permanent
• Carer Payments: Assessed case by case

Special Post-Separation Considerations

Income Changes

If your income has changed due to separation:

• Explanatory letter detailing circumstances
• Evidence of new arrangements (new job, increased hours)
• Professional references supporting changes
• Training or qualifications that support income claims

Temporary Circumstances

• Explain any temporary income reductions
• Provide timeline for income recovery
• Show evidence of steps being taken to improve situation
• Consider waiting until income stabilizes

Career Changes

• Document reasons for career changes post-separation
• Show qualifications for new career path
• Provide probation completion evidence if applicable
• Demonstrate income progression potential

Tips for Stronger Applications

Maintain Consistent Banking

• Keep salary in same account for clear payment trail
• Avoid cash transactions where possible
• Maintain account conduct (no overdrafts, dishonors)
• Show regular savings patterns

Document Everything

• Keep all paperwork organized and current
• Maintain digital copies as backups
• Update documents promptly when circumstances change
• Keep correspondence with employers, CSA, Centrelink

Professional Relationships

• Build rapport with HR department for smooth verifications
• Maintain good relationship with accountant (if self-employed)
• Stay current with Child Support Agency communications
• Keep legal representatives informed of income changes

Common Documentation Mistakes

Insufficient Evidence

• Providing only 1 month of payslips when 2-3 required
• Missing employment verification letters
• Incomplete bank statement periods
• Outdated tax returns for self-employed

Inconsistent Information

• Payslips don't match bank deposits
• Employment letter details differ from payslips
• Child support amounts don't match court orders
• BAS statements don't reconcile with tax returns

Poor Presentation

• Unclear photocopies
• Missing pages from statements
• Handwritten notes without professional backing
• Documents not in chronological order

Next Steps

Income verification post-separation requires careful preparation and attention to detail. Our team at Ding Financial understands the complexities of proving income in your new circumstances and can guide you through the process.

We'll help you:

• Understand exactly what documents you need
• Prepare your application for the best chance of approval
• Find lenders who are experienced with post-separation situations
• Structure your application to maximize your borrowing capacity

Contact us today for expert guidance on proving your income and securing the home loan you need for your independent future.