Income Annualisation Calculator: Boost Your Home Loan Strategy

income annualisation calculator

When applying for a home loan, one of the key factors lenders consider is your income. This is where an income annualisation calculator can be a valuable tool. Presenting your annual income in a clear, easy to understand format for your chosen home loan lender will increase your chances of first-time approval. But what exactly is income annualisation, and how can it benefit your home loan strategy by using an income calculator? We’ve written this blog to help you understand the power of income annualisation in getting you the right home loan for your needs and how to go about it. We are on hand to help you as your local, trusted mortgage broker. Just get in touch with us to see how we can help.

What is Income Annualisation?

Income annualisation is a process used to calculate your annual income, even if your income varies throughout the year. This is particularly useful for individuals with irregular income streams, such as:

  • Commission-based workers: Salespeople, real estate agents and other professionals who get paid on a commission basis in their work.
  • Self-employed individuals: Freelancers, contractors and business owners
  • Part-time workers: Those with multiple jobs or fluctuating hours

By annualising your income, you can present a more accurate picture of your financial situation to lenders. This can potentially increase your borrowing power and help you secure a larger home loan.

Using an income annualisation calculator is a beneficial way to prove your total annual income to a lender.

How to Use an Income Annualisation Calculator

An income annualisation calculator is a simple tool that can help you determine your annual income. To use it, you’ll typically need to input the following information:

  • Regular income: Your fixed monthly salary or wage
  • Variable income: Any income that fluctuates such as commissions, bonuses or rental income
  • Tax deductions: Any tax-deductible expenses that can reduce your taxable income

You will then be able to estimate your annual income, taking into account your tax obligations and other relevant factors.

Why Use an Income Annualisation for Home Loans Applications?

  • Increased Borrowing Power: By demonstrating a higher annual income (rather than just your most recent two payslips), you may be able to borrow more.
  • Faster Approval Process: Lenders may be more likely to approve your loan application if they can accurately assess your income.

Tips for Maximising Your Income Annualisation Strategy

  1. Accurate Record-Keeping: Maintain detailed records of your income and expenses to provide accurate information to your lender.
  2. Get the right advice: Seek professional advice, like our Professional Lending Solutions expert team, to understand the best strategies for annualising your income and maximising your borrowing power.
  3. Choose the Right Lender: Some lenders are more experienced in dealing with irregular income streams, so it’s important to choose a lender who understands your financial situation.

By understanding the power of income annualisation and using the right tools, you can improve your chances of securing a home loan that meets your needs.

You Next Steps: Contact Professional Lending Solutions

If you’re looking to maximise your borrowing power and achieve your homeownership goals, contact the experts at Professional Lending Solutions. Our team can help you navigate the complex world of home loans and find the right solution for your unique circumstances.