What your payslip annualises to
The year-to-date figure on your payslip is the most useful number on it and the least understood. Annualised properly it shows what you are actually earning including overtime and penalties, which is frequently well above your base salary and well above what one lender will count.
How to read your payslip
Find the year-to-date gross, which is the total paid since the start of the financial year on 1 July, before tax. Then work out how many weeks that covers, counting from 1 July to the end of the pay period. Dividing one by the other gives your true average weekly earnings, and multiplying by fifty-two annualises it. That figure includes everything you have actually been paid, which base salary does not.
Why it matters for a home loan
Because it exposes the gap between what you earn and what a conservative lender will count. If your annualised figure is well above your base, the difference is overtime, penalties, allowances or bonus, and how much of that a lender includes varies enormously. Knowing the size of the variable component tells you how much is riding on the lender you choose.
The traps in annualising
A period containing a large one-off payment inflates the figure. A period containing unpaid leave deflates it. A pay rise partway through means the earlier weeks understate your current rate. None of these make the calculation useless; they mean the number should be sanity-checked against your payslips rather than taken as gospel, which is exactly what a lender will do.
What lenders do with it
Most will not simply use your annualised figure. They will look at two years of payslips and PAYG summaries, average the variable components over one or two years, and apply their own percentage. The annualised number tells you what is at stake; the overtime guide explains how much of it different lenders keep.
Big gap between your base and your annualised figure?
That gap is the difference between lenders. Charles can tell you which ones count most of it.
Year to date income questions
What does year to date mean on a payslip?
The total you have been paid since the start of the Australian financial year on 1 July, before tax. It accumulates with each pay period, so a payslip in December covers roughly half a year and one in June covers close to a full year. The later in the year it is, the more reliable annualising becomes.
Will a lender use my annualised figure?
Not directly. Lenders typically want two years of payslips and PAYG summaries, then apply their own treatment: averaging the variable components over one or two years and counting a percentage of them. Your annualised figure is useful for understanding what is at stake rather than predicting what they will approve.
Why is my annualised income higher than my salary?
Because your salary is your base and your payslip records everything you were actually paid: overtime, shift penalties, allowances, commission and any bonus. For anyone in a rostered role that difference is often substantial, and it is the part lenders treat most differently from one another.
Does a bonus in the period distort the result?
Yes, considerably, particularly early in the financial year when it is spread across fewer weeks. If a large one-off payment sits inside the period, annualising will overstate your ongoing income. Lenders adjust for exactly this, which is why they average over longer periods.
Which figure should I use when planning?
For budgeting, the conservative one. For understanding your options, both: the annualised figure shows your real earnings, and the gap to your base shows how much depends on lender choice. Planning on the conservative figure and being pleasantly surprised is a better position than the reverse.
Related tools and guides
Estimates only, not credit or financial advice. This tool uses general assumptions and cannot see your credit file, verify your income or apply any particular lender's policy. Your position is confirmed in a full assessment.
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