Links Property Finance · Free calculator from a Sydney mortgage broker: Self-Employed Income Calculator
Your taxable income is not what lenders assess. Add-backs and two-year treatment change the figure.
Work out your assessable income
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How will lenders read your business income?
In one of three common ways: the latest year with add-backs, the average of the last two years, or the lower of the two. The calculator shows all three readings and the gap between them.
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Add-backs such as depreciation, interest on debts being refinanced and one-off costs lift the figure, and each lender accepts a different list.
Part of the employment and income home loans guide.
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I honestly couldn’t recommend Links Property Finance and Charles highly enough. After speaking with others who weren’t able to help me, Charles went above and beyond to understand my situation…
Charles at Links Property Finance made buying our first home so much easier than we expected. As first home buyers, we had a lot of questions around borrowing capacity, our deposit and the different government schemes available to us. Charles explained everything clearly, compared different lenders and kept us updated throughout the whole process. He was always easy to reach and made sure we understood what was happening from pre approval right through to getting our home loan approved. We would definitely recommend Links Property Finance to anyone looking for a mortgage broker, especially first home buyers who want someone to guide them through the process.
Charles looked after us really well and his knowledge gave us the confidence to purchase our property. He wasn’t pushy and always ensured we felt comfortable with the repayments.
Charles Touma, Mortgage Broker.
Why three readings
- Lenders commonly assess two-year self-employed income one of three ways: averaging both years, taking the latest year where the trend is sound, or taking the lower year conservatively.
- On a growing business, the difference between the average and the latest-year reading is often the difference between buying and waiting, and choosing the lender whose treatment suits your trajectory is the core of self-employed broking.
About add-backs
- Depreciation is a non-cash expense, most lenders return it to income.
- Interest on debts a new loan will clear can be added back, since the cost disappears.
- Genuine one-off costs, an equipment purchase, a fit-out, legal fees, may be added back with evidence.
- Voluntary super above the guarantee sometimes qualifies too.
- Every lender's list differs, which is why the tool shows a range rather than an answer.
Common questions about self-employed income
How do lenders read self-employed income?
Most work from your tax returns and notices of assessment, and each lender has its own approach to add-backs, one-off items and whether it averages the years or uses the latest. Two lenders can reach different figures from the same returns.
What if my latest year was much better than the one before?
Some lenders average the two years, some use the lower, and some can be argued into the latest year with a sound explanation of the growth. That choice alone can move a borrowing figure substantially, which is where lender selection earns its keep.
Do I always need two years of financials?
Usually, but not always: some lenders consider one year of figures or alternative documentation, with their own conditions.
Check the estimate with a broker
Your income can be assessed differently between lenders. Charles can compare your position before an application is lodged.
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