Use the Atomic Home Loans Income annualisation calculator to work out your annual income based on your year to date earnings.
If you are unsure of what your annual earnings are, for several different reasons it is important to be able to work this out. And fortunately, this calculator allows you to do just that.
By inputting your employment start date and the current date, along with your year to date earnings, this calculator will annualise your earnings to show you what you gross annual earnings will be.
Please note, this won’t account for any investment properties, depreciation benefits, negative gearings, etc. it simply a standalone calculator used to help you work out your annual earnings.
Another way to calculate your annual earnings is by using a simple trick. If you know your hourly rate, double that hourly rate, and add three zeros to it.
In other words, if you earn $25 an hour (pre-tax) and work full-tim, doubling $25 will give you $50, and adding three zeros will give you $50,000. This is a great way to estimate your annual salary as a full-time, 40 hour-a-week employee.
Alternately, you can simply multiply your weekly earnings by 52 weeks, giving you you annual salary.
This income annualisation calculator is great especially if you payslips are inconsistent. For instance, if you earn varying commission amounts each month as a sales person, or you work over-time some weeks while other weeks you don’t, using this calculator will give you a more accurate reflection of annual earnings.
This is especially useful when looking to buy a home and wanting to calculate your spending limit. In particular, it can help you calculate your borrowing capacity so you can determine how much you can spend and what the repayments would be like.
Keep in mind, some lenders will require a minimum of 6 months income evidence if you want to include your commissions and over time earnings on your loan application. Generally, they will also utilize only 80% of those earnings as oppose to 100% of your earnings.
This is because of the potential inconsistencies with commissions and over-time. For instance, you may no longer be offered over-time work when a new manager is hired, or you may stop making sales for a few weeks, thus your commissionable earnings are a lot less.
If you are in sales, or you work a lot of over-time, speak to a finance broker to get a better understanding of what your options are.
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