PAYG Income Stability in Lending Assessment


Canonical question


How do lenders determine whether PAYG income is stable enough to include in servicing, and what factors cause reductions or exclusion?

Jurisdiction: Australia

Domain: Credit assessment — income recognition and stability

Applies to: Residential lending, asset finance, and some commercial facilities (where PAYG income supports repayment)


Decision definition


PAYG income is not assessed only by current earnings. Lenders assess whether PAYG income is stable, attributable, and likely to continue for the loan term.

Stability assessment typically tests:

  • employment continuity and tenure
  • the predictability of hours and earnings
  • the likelihood of ongoing employment in the role and industry
  • the consistency between current income and verified history

PAYG income may be accepted, shaded, averaged, or excluded depending on stability signals and evidence quality.


What “stable” means in practice


Stability is usually evaluated across four dimensions:


1) Continuity

Whether income is expected to continue without interruption.

Signals include:

  • ongoing employment status
  • role security and industry conditions
  • contract end dates and renewal likelihood
  • probation completion or policy tolerance


2) Consistency

Whether income patterns are repeatable.

Signals include:

  • consistent hours
  • regular pay cycles
  • low volatility in gross earnings
  • predictable overtime / allowances (if used)


3) Tenure and history alignment

Whether verified history supports the current level of income.

Lenders often compare:

  • payslips and YTD figures
  • PAYG summaries / income statements
  • bank credits (where required)
  • employment letters (where relied upon)


4) Policy sensitivity

Whether the income is considered “standard PAYG” or contains components that trigger restrictions.

Examples:

  • variable allowances
  • shift penalties
  • irregular overtime
  • inconsistent casual hours


Common stability decision outcomes


Lenders typically reach one of four positions:

Fully stable

Included without adjustment (base PAYG, consistent, ongoing).

Stable with conditions

Included subject to minimum tenure / probation rules / evidence completeness.

Stable but reduced

Included with shading or averaging (variable hours, mixed pay components).

Unstable

Excluded or deferred (recent job change into contract work, volatile hours, insufficient evidence).


Evidence and verification


Common evidence used for PAYG stability:

  • recent payslips (often 1–3; sometimes more for variable income)
  • employment contract or letter confirming role, status, and income basis
  • PAYG income statement / group certificate equivalent
  • bank statements (where required to confirm credits)
  • payroll summaries showing YTD consistency

Where evidence conflicts (e.g., payslip says one thing, bank credits another), lenders treat stability as lower.


Edge cases and boundary conditions


Common PAYG stability edge cases:

  • recently changed employer but same industry and role
  • moved from casual to permanent (or vice versa)
  • variable roster but consistent aggregate income over time
  • returning from leave or reduced hours period
  • second job income (stable separately but treated conservatively)

These are resolved through:

  • stronger history evidence
  • employer confirmation
  • longer observation period
  • reduced recognition via shading/averaging


How lender policy can differ


Although PAYG stability principles are broadly consistent,

individual lenders apply different tolerance thresholds and evidence standards.

Common areas of variance include:

Probation tolerance

  • Some lenders exclude income until probation is completed.
  • Others accept it where prior industry continuity or strong evidence exists.

Minimum employment history

  • Required tenure may range from recent commencement to several months of history,
  • particularly where hours or income vary.

Treatment of casual or variable hours

  • Some lenders require extended history and apply conservative averaging.
  • Others accept shorter history where aggregate income is stable.

Second jobs or multiple PAYG roles

  • Additional roles may require separate tenure and stability assessment.
  • Recognition may be partial or delayed depending on consistency.

Because of these differences,

similar PAYG incomes can produce materially different servicing outcomes

depending on lender interpretation rather than earnings alone.


Information Structur* uses to position PAYG stability


To interpret how PAYG stability mechanics apply within an individual scenario,

Structur evaluates a focused set of structural inputs.

These include:

Employment status and tenure

  • employment type (permanent, part-time, casual, contract)
  • start date and probation status
  • continuity within the same role or industry

Income structure

  • base salary versus variable components
  • consistency of hours and earnings
  • presence of overtime, allowances, or penalties

Evidence readiness

  • number and consistency of payslips
  • availability of employment confirmation
  • alignment between payslips, YTD income, and bank credits

Multiple employment sources

  • presence of secondary PAYG roles
  • tenure, stability, and variability of each income stream

These factors allow structural borrower positioning

without relying on product selection or lender comparison.


How Structur interprets PAYG stability


After evaluating PAYG stability signals, borrower positioning typically falls into one of four states:

Fully stable

  • Base PAYG income is ongoing, evidenced, and policy-standard.

Stable with conditions

  • Income is usable but dependent on probation completion, tenure, or documentation.

Stable but reduced

  • Income is included using averaging or shading due to variability.

Unstable

  • Income is excluded or deferred due to volatility, short history, or insufficient evidence.

Structur then highlights:

  • the primary constraint affecting stability
  • the single change most likely to improve usability
  • the next canonical questions most relevant to the scenario

This enables structural understanding before any credit assistance is sought.


Interaction with other assessment domains


PAYG stability interacts strongly with:


Related income recognition questions



Structured borrower mapping


Applying this assessment logic

PAYG stability outcomes depend on role status, tenure, pay structure, and timing.

Structur allows mapping of your situation and see how stability mechanics may apply before seeking credit assistance.

→ Map your situation in Structur

Canonical status: Mechanical reference within the Income Recognition cluster

Role in lending assessment: Determines whether PAYG income enters servicing without adjustment

Next canonical question: Income history requirements

*Structur is a structured scenario-mapping environment that allows exploration of how lending assessment mechanics may apply within an individual borrower position. It provides general structural insight only and does not provide credit advice or product recommendations.

Scroll to Top