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Income

Product policy 

Use this guide to introduce and explain AMP Bank products to your customers.

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Credit policy

Our Quick Reference Guide highlights the main sections of the AMP Bank Credit Policy. The Credit Policy should be consulted if you require further detailed information. Contact your Business Development Manager who will be able to assist.

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Income

PAYG Income

  • Minimum 6 months employment with current employer. If less than 6 months then minimum 12 months continuous employment within same occupation type or industry. 12 months continuous employment means maximum of 1 break of up to 31 days in the 12 month period.
  • Casual and contract employee must be with current employer for 12 months.
  • Income evidence must be provided from:
    • Two consecutive computer generated payslips confirming at least 3 months YTD income with the employer and employees names (Allow acceptance of emailed payslips as long as they contain (as a minimum) borrower name, employers name and ABN, and year-to-date income.). The most recent payslip must be less than 30 days old at the date the loan was submitted. (use PAYG income assessor to calculate the income that can be used for servicability) OR
    • Where the most recent payslip shows less than 3 months YTD income, we require the two current payslips plus one of the following:
      • Latest year's group certificate OR
      • Latest year's tax return and ATO Notice of Assessment OR
      • The last payslip from last financial year showing at least 3 months YTD income OR
      • An employment contract signed and dated that provides the employment conditions OR
      • An employment letter that is dated within the last 30 days that provides the employment conditions
    • Where borrowers do not receive payslips from their employer the following must be provided:
      • An employment letter that is dated within the last 30 days that provides the employment conditions. AND
      • 3 months bank statements showing salary credits that match the employment letter. The latest statement must be less than 30 days old
    • If handwritten payslips or Group Certificates are provided, they must be supported by the most recent year's Tax Return and ATO Notice of Assessment.
  • Borrowers working for family/family companies must supply:
    • 2 years tax returns; and
    • ATO assessment notices. 
  • All probation periods must be completed.

PAYG - Salary Packaging / Vehicle Allowance

  • Applicable to PAYG employees only
  • Pre or post tax deductions on payslips will be excluded from income used in serviceability. AMP Bank may consider adding back deductions if they can be converted to cash at any time.
  • Salary package can be included for serviceability subject to an employment letter confirming it can be converted to cash at the borrower's option
  • Vehicle allowance is acceptable for serviceability (lease or hire purchase payments must be included in assessment)
  • $5K can be added to gross salary for borrowers that receive a fully maintained company car as a condition of their employment (to be confirmed by employment contract of employment letter)

Self Employed (Sole Trader/ Partnership/ Company/ Trust Income)

  • Minimum self employed period 2 years.
  • All applicants (including directors and trustees) must provide personal/company tax returns for the previous 2 years and a mininum of one financial year's ATO assessment notice for each income source.
  • Balance Sheets and Profit & Loss statements must be provided for the previous 2 years.
  • Income projections and cashflow forecasts or income from a business being purchased are not acceptable for serviceability assessment.
  • When:
    • Income from the latest financial year has increased by less than or equal to 20% of the previous year, then the latest years income is used.
    • Income from the latest financial year is more than 20% of the previous year, then a maximum of 120% of the previous years income is used.
    • Income from the latest financial year is less than the previous year, the lower of the two figures is used. 

Self Employed Addbacks

  • The following may be added back to the net profit figure:
    • Director's salary.
    • Interest charges on any loan being refinanced.
    • Superannuation payments in excess of legislative requirements.
    • Non recurring expenses.
    • Amortisation of goodwill.
    • 50% of depreciation (excluding short term items such as computer equipment etc). 
    • Only the following distributions from a discretionary trust are allowed to be added back for serviceability:
      • Trustees distribution (Individual or Company)
      • Husband/Wife or defacto of the trustee
      • Dependant children of the trustee

Rental

  • Evidence from:
    • Current lease or tenancy agreement; or
    • Estimate of rental from AMP Bank valuation; or
    • Estimate of rental in writing by letter from licensed real estate agent (must be less than 30 days old).
    • A current rental statement from a real estate agent (must be less than 30 days old).
    • Where multiple sources of income are supplied (eg. valuation and lease agreement) the lower figure will be used for serviceability purposes).
  • The maximum rental return included in the assessment rate must be less than or equal to AMP Bank's assessment rate of the loan (i.e. 2% above the actual loan rate). This applies to all acceptable rental income regardless of whether we take that property as security or not.

    For example, if the assessment rate is 8.57%, the annual rental income is $26,000 and the property value is $250,000 we would calculate the rental yield as:
      Annual Rental Income    /    Property Value    x    100    =    Rental Yield
                   $26,000                /         $250,000        x    100    =        10.4%
    In this example, the rental yield would be exceeding the assessment rate, so we could only use 8.57% of the property value as the rental figure.
      Property Value   x   Assessment Rate  =  Rental Included in Assessment
          $250,000        x                8.57%          =              $21,425 pa
    Therefore $21,425 (or $412.02 per week) can be included as the gross rental income. This amount may need to be discounted further as we will only take 80% of this amount if Mortgage Insurance is applicable.
  • The following is acceptable for serviceability assessment:
    • 80% of the verified gross rental for residential properties.
    • 80% of the verified gross rental for residential high density properties.
    • 50% of the verified gross rental for serviced apartment.
    • 65% of the verified gross rental for commercial properties.
  • Rental guarantees (eg. for display homes) are not acceptable. 

Guarantor Income

  • Not acceptable except in the case of directors/trustees as guarantors for company/trust borrowings.
  • When director's/trustee's income is included a minimum surplus is required to be included in the assessment. 

Superannuation/Annuity Income

  • Evidence of this income must be verified by the following: 
    • A statement of holdings dated within the last 6 months AND
    • Confirmation of the current balance dated within the last 30 days AND
    • Bank account statements dated within the last 30 days showing the payment amount.

Permanent Pensions

  • Only the following Centrelink income types are acceptable:
    • Age pension.
    • Widow allowance
    • Family Tax Benefit Part A*
    • Family Tax Benefit Part B*
    • Large Family Supplement*

    * Family Tax Benefit part A, B and Large Family Supplements are only acceptable if the borrower can verify that it will be received for a minimum of 5 years. Therefore, Family Allowance will be allowable for all children who are under the age of 13 years.

    Evidence of this income must be verified by one of the following:

    • A Centrelink statement dated within the last 30 days
    • Bank account statement dated within the last 30 days

    All other Centrelink pension types are not acceptable income types.

  • Only the following Department of Veterans Affairs income types are acceptable:
    • Service and Age pension.
    • War Widow's or Widower's pension.

Evidence of this income must be verified by one of the following:

  • A Department of Veterans Affairs statement dated within the last 30 days
  • Bank account statement dated within the last 30 days

All other Veterans Affairs pension types are not acceptable income types.

Unacceptable Pension/Benefit Types

  • The following pension/benefit types are not acceptable:
    • Unemployment/sickness benefits.
    • Non permanent pensions.
    • Worker's compensation.
    • Accommodation/student allowance.
    • Emergency benefits.
    • Scholarship income.
    • Maternity Leave income.
    • Disability Pension

Child Support/Maintenance

  • Acceptable for dependents under the age of 13 years, registered with Child Support Agency (CSA) and verified by a copy of current years CSA Notice of Assessment and 6 months Bank statements. 

Investment Income

  • Minimum 2 years investment/interest evidenced from previous 2 years tax returns. Income assessment is the same as described in Self Employed (above).
  • Capital gains on sale of assets is not acceptable income. 

Negative Gearing

  • Borrowers with TBE < = $1.25 million:
    • 100% of the verified gross rental income for standard residential investment properties can be used for assessment purpose where primary LMI cover is not required and the total rental income is less than or equal to 50% of the total overall income.
    • Where primary LMI cover is required gross rental income is as per 'Rental' above.
  • Borrowers with TBE > $1.25 million:
    • Gross rental income is as per 'Rental' above. In addition to rental income interest costs applicable to loans for residential investment properties are to be calculated and this figure to be used to reduce the borrower's taxable income. The interest cost is to be included in serviceability as a non taxable addback.

Overseas Income

  • Maximum of 80% overseas income (salary, investment, rental) is acceptable as long as it is paid in one of the following currencies:
    • Canadian Dollars (CAD)
    • Chinese Yuan (CNY)
    • Euro (EUR)
    • Great British Pound (GBP)
    • Hong Kong Dollar (HKD)
    • Japanese Yen (JPY)
    • New Zealand Dollar (NZD)
    • Singapore Dollars (SGD)
    • U.S. Dollar (USD)
  • The conversion will be based on the day of the initial credit assessment and the Google currency convertor will be used. 
  • Confirmation of the income must be via a translated employment contract and the most recent 3 months bank statements showing the salary credits. All other standard employment and income policies are to apply.