Affordability Calculator

For Interest Only Loans please input the term as 25 years, for all other repayment types enter the term required.

You must use the calculator on every case before submitting a DIP. If you experience any difficulties, please contact your IRM or call the Broker Help Line on 0345 600 1469.

An assessment of income and expenditure is the underwriting measure used in establishing the maximum that can be borrowed. We have a short Decision In Principle (DIP) form to determine the amount your clients may borrow. The form will be used in conjunction with a full credit reference search to further enhance the decision.

The initial underwrite of the mortgage application will be carried out using the Affordability Calculator.

Please check that the mortgage application fits within the Society's LTV ratios.

Income

  • For any of the incomes listed where 50% is used, input the full amount under Non-Guaranteed other and the calculator will automatically take off 50%.
  • The calculator will automatically apply deductions to gross income based on tax bands and National Insurance to calculate the net income.

Income that can be used within the calculator is listed below:

 

Employed Applicants Self-Employed Applicants
Those who trade as a Business Those who own a Limited Company
Basic salary or Directors Remuneration 100% - 100%
Net Profit - 100% -
Dividends - - 100%
Guaranteed Overtime 100% - -
Bonus Payment Guaranteed 100% - -
Non-guaranteed 50%
Commission 50% - -
Maintenance Received 100% 100% 100%
Rental income (Investment) 0% 0% 0%
Investment Income 0% 0% 0%
Pension Income 100% if received 100% 100%
Non-guaranteed Overtime / second job 50% - 50%
Benefits* 100% 100% 100%

*See A-Z Lending Criteria Guide for list of acceptable benefits.

Contract Workers

Employees on Fixed Term Contracts.

The following criteria must be met:

  • Funds to be for a loan on main residence for own occupation.
  • Must be a UK resident or have indefinite leave to remain in the UK.
  • Contract must be for at least 12 months.

Self Employed Contracts - IT / Management Consultants - Treat as Self employed.

Outgoings

All personal expenditure, including all loans and credit cards shown within the credit search, must be deducted as outgoings.

For a Decision in Principle we must have authority to carry out a credit search and the income and expenditure needs to be clearly completed in order to establish the true free net disposable income.

With regard to credit cards, where balances are to remain after completion, the balance x 3% maintenance payment will be shown as an outgoing.

The form must be fully completed and the declaration ticked.

Responsible Lending and affordability

  • All applications are subject to affordability checks.
  • Key considerations will be the applicant's overall conduct of their bank account and credit reference checks. If these do not demonstrate that the mortgage is affordable, even if the Affordability Calculator suggests we might consider the loan, the application may be declined.
  • Any figures used in applications must be validated by supporting documentation.