What is Annual Net Income?
Individuals who complete work in return for a pay-check earn an income. Every employee receives compensation as a salary or hourly wage. The total amount paid equals the gross income. Your financial documents outline your salary or hourly wage. It also outlines the deductions mandated by the Australian government. Thus deductions reduce your gross income.
After the deductions, the net income is the result. When you apply for a mortgage or other loan product, lenders request your annual net income. Keep in mind that this number is a starting point. Your annual net income decreases after paying your monthly expenses.
Practicing fiscal responsibility helps you maintain a large portion of your annual net income. However, you have responsibilities.
Lenders know that homebuyers subtract their rent and living costs from their annual net income. Some also subtract their credit card payments, vehicle payments, and other debt payments.
To qualify for a mortgage with favourable loan terms, the income left after all expenses is as important. A high net income is great. If the amount left is less than three times the potential mortgage monthly repayment, lenders consider it a risk.
Mortgage House provides several online tools for potential and current clients. For example, the car loan calculator allows a vehicle buyer to see how much car repayment they can comfortably afford.
Annual Net Income Conclusion
Before applying for a Mortgage House home loan or other loan products, it’s important to know your annual net income. Our loan specialists receive access to tools that help you understand it. Our online calculators also outline how your income impacts potential loan terms.