A common question you’ll be asked when buying a house, renting an apartment or applying for a bank loan is: Can you provide proof of income?
Providing proof of income is expected for those wanting to secure a loan or sign a lease. Knowing what these documents are can be helpful if you were asked to provide one.
In this article, we explain what is proof of income and outline what documents can serve as proof of income in Malaysia.
What Is Proof of Income?
Let’s start with the basics. Proof of income is an official document that summarises your earnings over a specific period (usually a year). These documents prove that you are earning the amount you claim.
Generally, this documentation is required by landlords, banks, insurance providers, and credit card companies to determine your ability to make payments over a period of time.
Examples of situations where you would need your proof of income include:
- Submitting tax returns
- Purchasing health insurance
- Obtaining a credit card or mortgage
- Renting an apartment or a house
- Getting a car loan, personal loan etc.
Read More: Cash-Out Refinancing Malaysia: The 4 Advantages You Should Know
Banks & Proof of Income in Malaysia
When refinancing your loan, you are required to provide your income documents to your lender. These documents serve as proof of your personal and financial information.
The bank or lender you are applying for your loan from will review them to verify if you are earning enough income to settle your loan.
However, do take note that while each lender has its own unique application and eligibility requirements, many of them will ask for similar proof of income.
Therefore, by familiarising yourself with the types of income documents you may need to submit, you can prepare yourself for the application process and increase your chances of approval.
Proof of Income Required for a Bank Loan in Malaysia
There are many different types of employment in Malaysia. From full-time and part-time contracts to casual (freelance) jobs, fixed term, internships and more.
Moreover, each type of employment has its own wages and income documents. Therefore, it is essential to know the correct type of income documents you should submit when applying for any type of loan.
1. For Employees with a Stable Income
- Photocopy of IC
- Latest salary slips and bank statements of at least 3 months
- Latest EPF Statements
- Latest EA Form
- Latest Income Tax Statement & Receipt
- Employee Letter
2. For Sole Proprietors
- Photocopy of IC
- Business SSM certificate
- Latest 6 months’ bank statement for Company’s Current Account
- Latest Income Tax Statement & Receipt
3. For Private Limited Companies (Sdn Bhd)
- Photocopy of IC
- Business SSM certificate
- Company Memorandum and Articles Association
- Latest 2 years’ Financier Reports/Audit Reports
- Latest 6 months’ bank statement for Company’s Current Account
- Latest Income Tax Statement & Receipt
It is important to note that contract employees, such as freelancers, gig workers and part-timers, can have their loan applications rejected. This is because banks and financial institutions may assume that they are unable to repay their loan.
However, this issue can be resolved by providing the necessary financial documents, such as income tax documents or other proof of income. If you need any help preparing your income documents, our consultants at Bluebricks can help.
What are the Challenges in Verifying Proof of Income in Malaysia?
While the income verification process may seem straightforward, some challenges may arise during the application process. Three common income verification challenges include:
1. Providing Inaccurate Income Information
When applying for a housing loan, credit card, or property lease, applicants may accidentally include the wrong income, prolonging the lending process. Therefore applicants must always carefully review the information they have provided.
Moreover, there are some instances where an applicant intentionally makes their earnings appear higher than they are. This is because they want to make it seem as if they have the finances to manage ongoing payments.
However, applicants are advised never to put false information in their application documents, as this is against the law.
2. Submitting the Wrong Income Verification Documents
As there is a variety of proof of income documents available, it’s easy for many loan applicants to submit the wrong income document when applying for a service, a loan, or a rental.
While providing the wrong documents can be an accidental oversight, it can slow down the lending process.
The applicant will have to take more time to prepare their new income documents, and banks and other lenders will have to pay additional attention when conducting verifications.
3. You Do Not Meet The Required Income Threshold
Sometimes, you will not meet the income threshold when applying for a loan or a rental property. If this happens, you’ll likely need a co-signer on your application, or you can reapply once your financial situation improves.
If you do not have the time or are unsure if the documents you have prepared are correct, we recommend consulting an expert who can help you review your income documents.
Read More: Why Refinance: 6 Reasons to Refinance in Malaysia
How Bluebricks Can Help You Prepare Your Proof of Income
When you apply for a loan in Malaysia, banks and other financial institutions will have different conditions in terms of credit scores, down payments, and debt-to-income ratios.
However, you will almost always have to show your proof of income.
If you are applying for a loan for the first time and you need help preparing your income documents, contact Bluebricks today!
We are a leading loan agency in Malaysia with extensive knowledge and experience to help our clients obtain their preferred loans at affordable rates.
We also provide free consultations where you can speak with our financial experts. They will come up with solutions to solve your issues and answer any other questions you may have.
Refinancing Loan Rejected Services
Bluebricks offers comprehensive loan rejected services to help you qualify for the funds you need. Our experienced team can identify the reasons your application was denied and will develop a strategy to improve your chances of approval. We will also resubmit your application to your preferred bank for you.
Discover how our refinance loan rejected services can get your loan application approved.
Proof of Income – FAQs
The most important part of the income verification process is securing the appropriate income documents for a successful loan application.
You should ensure that you’re filling out forms completely and honestly, as there are penalties for intentionally adding incorrect information.
Are you interested in learning more about proof of income in Malaysia? We have compiled three of the top questions and answers that you may find helpful to broaden your knowledge about income documents.
Yes. Most lenders request proof of income before granting loan applications, especially for a car or home loan.
Some lenders or bank institutions may be willing to call your employer to verify your income, but in most cases, they prefer having hard copies of your proof of income.
Yes, you can. Payslips, bank and EPF statements can be submitted as your proof of income and you must have more than RM3,000 as your income.
On the other hand, business owners must submit their bank statements, Suruhanjaya Syarikat Malaysia (SSM) statement and have a positive cash flow of more than RM50,000 for their loan application to be approved.
Malaysian freelancers must prepare their financial documents to show their creditworthiness, such as their latest payslips.
It is important to know that some banks prefer to offer loans to fixed-income earners only, while others are more flexible with variable-income earners (e.g., freelancers and commission-based jobs).
You need to check all the rules and requirements, so you can apply at the right bank. If you don’t know which documents to prepare, contact us for help.
