What is an Accountant’s Letter?

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Russell Munfaredi

Russell Munfaredi

Russell Munfaredi is the Managing Director and owner of Mortgage Pros. Russell’s wealth of knowledge, unstoppable drive and impeccable service has been the key driver of Mortgage Pros’ success.

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When applying for a home loan, banks and non-bank lenders may require self-employed applicants and business owners to provide an accountant’s letter explaining any queries.

What banks look for in an accountant’s letter

Your accountant’s letter should have the following to be considered valid and acceptable:

  • Your accountant’s company letterhead indicates the firm’s Australian Business Number (ABN).
  • Details of the accountant’s industry membership or CPA qualifications
  • The letter must be dated and signed
  • Must contain the name of the signatory
  • Must contain the name of the person in the subject (whom the letter is about), including the company owned by the same person
  • Must indicate and confirm that the accounting firm acts as the accountant of the person whom the letter is about
  • May include a disclaimer protecting the accountant from legal action

Note that many banks and non-bank lenders will accept faxed copies from your accountant but will require your mortgage broker to secure the original on file.

Talk to our senior mortgage brokers at 1300 030 388 or enquire now and we’ll let you know how we can help.

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Accountant Letter Template

You can have your accountant write the letter following their template if they have one. Otherwise, you can ask them to use this template to confirm your income.

Make sure they affix their letterhead and accurate details, and fax the official letter to us as your mortgage brokers.

Note that you can use this sample letter when the bank requires a confirmation letter indicating that the business you own is operating at a profit.

MM/DD/YYYY

To Whom It May Concern:

Re: {Applicant Name & Company Name}

We confirm the following details concerning {Applicant’s Name} and their company {Company Name}, for the purpose of their home loan application.

As the designated accountant for {Company Name}, we hereby confirm that to the best of our knowledge, based on our assessments and records, {Company Name} is operating profitably and can pay all the liabilities it has.

The information provided is accurate and entirely based on our internal records and bookkeeping.

Should you require further clarifications and additional information, please do not hesitate to contact our accounting office at {Accountant’s Number}. We are fully committed to providing all the necessary assistance to facilitate {Applicant’s Name}’s home loan application.

Warm regards,

(SIGN)

{Accountant’s Name}
{Accountant’s Position}

{Accounting Firm}

{Contact Information}

Feel free to talk to our Mortgage Pros senior mortgage brokers at 1300 030 388 or enquire now and we’ll assist with your letter.

Other Types of Accountant’s Letters

Aside from a simple confirmation, you may have unique circumstances requiring an accountant’s letter. Besides, your bank may request a letter for a different reason, especially if they want to confirm something from your application documents.

Note that privacy legislation restricts accountants from talking directly to your chosen bank or mortgage broker. That’s why you may need to request them to write a letter to your bank.

We’ve brought together different common types of letters that you may need so your accountant will have less work to do.

1. Businesses no longer trading/operating

As the designated accountant for {Company Name}, we hereby confirm that to the best of our knowledge based on our assessments and records, {Company Name} is no longer trading and operating and has no significant liabilities.

2. One-off expenses

We confirm that {Company Name} had a significant debt with their primary client during the 20XX-XX financial year which necessitated a write-off.

It’s important to note that this is a one-time event and is unlikely to reoccur. It would be appropriate to add this expense back when calculating {Applicant Name}’s ability to service a new loan.

3. Income change between financial years

We confirm that {Company Name} significantly increased their profit between 20XX-XX and 20XX-XX. This is because {Applicant’s Name} was not working for more than 6 months due to a personal emergency requiring their immediate attention.

For this reason, it would be appropriate to use the income figures from the previous financial year to assess {Applicant Name}’s capacity to take a new loan.

4. Income change due to start-up expenses

We confirm that there has been a significant increase in the profit generated by {Company Name} between 20XX-XX and 20XX-XX financial years. This is because 20XX-XX was the first year of company operation and several one-time expenses were necessary for start-up, including initial marketing costs and a comparatively smaller client base.

For this reason, it would be appropriate to use the 20XX-XX (newer) financial year to assess {Applicant Name}’s ability to service a new loan.

5. Owning a new business similar to the previous job

We confirm that {Applicant Name} was employed as a Data Security Consultant for 11 years before leaving to start his own business in the same industry.

{Applicant Name}’s business has only begun operating for a year, but it has already generated a substantial income with a consistently increasing customer base.

With successive enquiries with the company’s director and its recent business activity statements, it would be reasonable to expect the company’s income in the following financial year to be equal if not better than the previous financial year.

6. Contractor without any significant expenses

We confirm that {Applicant Name} is currently operating as a sole proprietor that contracts with several businesses. They are paid at an hourly rate and have incurred no significant expenses such as staff, rent, and tools unlike other business types.

For this reason, it would be appropriate to evaluate {Applicant Name}’s income as someone employed on a PAYG basis.

7. Recent changes in ABN or Business Structure

We confirm that the {Company Name} is the same business registered under {Applicant Name}’s sole trader ABN. While the company is a new entity, the business is essentially the same.

{Applicant Name} has been operating as a sole trader in this business for more than 10 years. For this reason, evaluating these two businesses as a single entity would be appropriate when assessing {Applicant Name}’s ability to take on a new loan.

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Adding a disclaimer

When asked to provide a letter necessary to lobby your loan application, some accountants may hesitate to write a letter due to concerns about potential legal action or self-incrimination.

While accountants should not sign and certify a confirmatory letter that’s not true, there’s no reason for your business’s accountant to refuse to write a honest and true letter.

That said, banks and non-bank lenders will accept an accountant’s letter with a disclaimer added at the bottom.

Your accountant can also write the disclaimer however they see fit.

For example:

All the information regarding {Applicant’s Name} and {Company Name} stated above has been confirmed via independent enquiries with the client.

While we believe the information we confirmed is true to the best of our knowledge and available records, we accept no liability regarding the accuracy of this information or any loss incurred by any entities who rely upon the information confirmed in this letter.

Why banks need an accountant’s letter

While your bank statements and other documents illustrate a large portion of your financial situation and capability to take up a new loan, your bank or lender may need to clarify some information when evaluating your income properly.

That’s where an accountant’s letter becomes very useful. An official letter from your accountant will clarify these ambiguities and may help you accept your home loan, which would otherwise be declined.

Need help with your home loan?

If you have been required to issue an accountant’s letter or are worried that you’ll need it but don’t know where to start, feel free to talk to our senior mortgage brokers today.

At Mortgage Pros, we’ve worked with professionals and entrepreneurs in lobbying their home loan applications to reinforce borrowing power and negotiate more competitive rates.

Talk to us at 1300 030 388 or enquire now to learn more.

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