You hand the same payslip to two different lenders and somehow end up with two different income figures. It feels like a mistake, or like one of the banks is trying to lowball you. In most cases, neither is true. Each lender is reading your payslip through a different formula, and those formulas can produce a real, sometimes significant gap from the same piece of paper.
Quick Answer
Lenders annualise your year-to-date income using different reference points and different rules for variable pay. Some use the pay date, others use the pay period end date. Some accept all of your overtime and allowances, others shade it down. These differences in method, not your actual income, are usually why the same payslip produces two different numbers at two different banks.
A Real Example: A $10,000 Gap From the Same Payslip
We recently worked through a scenario where the gap between two lenders came to almost $10,000, calculated from the exact same payslip.
One major bank used the pay date to calculate days elapsed in the financial year. A different lender used the pay period end date instead. That single difference in reference point changed the number of days used in the annualised income formula, which flowed through to a noticeably different borrowing position.
Here is a simplified version of how that plays out.
| Method | Reference Point | Days Elapsed | YTD Gross | Annualised Income |
| Lender A | Pay date (31 December) | 184 days | $48,000 | $95,217 |
| Lender B | Pay period end date (27 December) | 180 days | $48,000 | $97,333 |
The difference here is $2,116 on this simplified example, and in real applications with larger incomes, more pay periods, and overtime or allowances layered on top, that gap can grow considerably, in some cases reaching the sort of $10,000 difference we saw in a recent client file. The income did not change. The method of reading it did.
Why the Same Payslip Produces Different Numbers
There are four main reasons lenders land on different annualised income figures from identical documents.
Reason 1: Pay Date Versus Pay Period End Date
Different lenders use different reference points to calculate your year-to-date annualised income. Some use the date you were actually paid. Others use the date your most recent pay period ended.
This matters because your pay date is often after your work period has already finished. If a lender uses the pay date, your income gets spread over more calendar days than you actually worked, which lowers the daily average and reduces your annualised figure. A lender using the pay period end date instead works from a shorter, more accurate window, which usually produces a higher annualised number.
Reason 2: Payroll Timing Around the New Financial Year
At the start of a new financial year, payroll timing can distort your year to date figures in ways that have nothing to do with your real income.
Some income earned in June is paid in July. Some July work is paid in a later pay cycle. Because the early financial year has fewer pay cycles on record, each individual payslip carries more weight in the calculation, which makes July to September the period where this distortion shows up most.
For example, if your pay period runs from 23 June to 6 July, but your pay date is 10 July, part of that payment technically belongs to the previous financial year. Depending on how a lender interprets this, the entire payment may or may not be counted in your new year to date figure, which creates yet another point of difference between lenders.
Reason 3: How Lenders Treat Overtime, Bonuses and Commission
Lenders view variable income, such as overtime, bonuses, commission and allowances, as carrying more risk than your base salary, because it can reduce or disappear without notice. To manage that risk, most lenders apply a discount known as shading.
Conservative lenders often recognise 80 percent of your overtime, commission, allowances or bonuses. If you earned $20,000 in overtime over the year, one lender might count it as $16,000, while a more conservative lender might count it as little as $10,000.
More flexible lenders, including some specialist and non-bank lenders, will accept 100 percent of your regular overtime or allowances, provided you can show a consistent history, usually three to six months or more.
Reason 4: Historical Averaging Versus Most Recent Year
If your income fluctuates, or you receive an annual bonus, lenders also differ in how far back they look.
The standard approach for most major banks is to average your last two years of variable income. If your income dropped in your most recent year, some conservative lenders will use the lower of the two years rather than an average, which can reduce your assessed income further. A smaller number of lenders will accept your most recent twelve months only, or your current annualised year to date figure, which benefits borrowers whose income is trending upward.
Summary of Common Lender Approaches
| Income Element | Conservative Approach | Flexible or Specialist Approach |
| Overtime and allowances | Shaded to 50 to 80 percent of total | Up to 100 percent accepted with 3 to 6 months history |
| Bonuses and commission | Two year history required, lowest year used | One year history accepted, current rate used in full |
| Self employed or director income | Average of last two years of net profit | Self-employed or director income |
Why This Actually Matters
A difference of a few thousand dollars in your annualised income might not sound significant on paper, but it can directly affect how much you are able to borrow, whether you qualify for an LMI waiver tied to a minimum income threshold, and which lenders are even worth applying to in the first place.
This is also why two people with the literal same income, applying to two different lenders, can walk away with two very different outcomes. Neither lender has made an error. They are simply applying their own credit policy to the same set of facts.
What This Means for You
Lenders are not wrong when their numbers differ from each other. They are using different data points and different rules applied to the same payslip. The gap is in interpretation, not in your actual income.
This is exactly where a broker earns their value. An experienced broker knows which lenders use pay date versus pay period end date, which lenders shade overtime heavily and which accept it in full, and which lenders will look favourably on your specific income pattern. Positioning your file with the right lender from the start can be the difference between an application that gets knocked back and one that sails through, sometimes worth tens of thousands of dollars in borrowing capacity.
Year to Date Income Calculator
Laxmi Home Loans — For broker use only
Input
Calculated Dates
Published Result
- Enter gross YTD income, payment frequency and pay period ending date.
- If employment started after 1 July of the current financial year, enter the employment start date above.
- Where the YTD period is less than 3 months, you must also obtain a payment summary or tax return. Use the lower of the annualised YTD amount and the PAYG payment summary or tax return.
- Where the YTD amount includes bonus or commission payments detailed on the payslip, deduct those amounts before entering the gross YTD figure.
- Clear the form before entering a new scenario.
- This calculator is to be used in conjunction with lender credit policy requirements. Results may vary for different income types.
Frequently Asked Questions
How can a broker help with this?
A broker who understands which lenders use which method can position your application with a lender likely to assess your income more favourably, rather than applying to a lender whose policy works against your specific income pattern.
Next Steps
Speak with us in English, Nepali, or Hindi. Book a free consultation, and we will assess your eligibility across more than 50 banks and lenders at no cost to you.
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Disclaimer: This article is for general information only and does not consider your personal objectives, financial situation or needs. It is not financial advice. Lender policies on income assessment vary and are subject to change. Speak with a qualified mortgage broker before making any borrowing decisions.Laxmi Home Loans is the trading name of Mero Chino Groups Pty Ltd, ABN 76 169 013 012, Credit Representative No. 476974 under Australian Credit Licence 383640.
