Affordability - surplus amount

Pammy

Hi,

I have been looking into affordaibility and how this is calculated. I have only been asked about it very tentatively for my application, not going into great detail.

Once your mortgage is paid is there an amount of money left the lenders like to see surplus? I wondered if there was amount that is common to most lenders.

Also do they base this affordability on both incomes as one or do they treat a joint application as two seperate people?

Thanks

VIGILANT22

When you apply for a mortgage all details are taken...sgl/joint.(they can see yr liabilities on credit file)..plus other living expenses are calculated..then when you submit yr bank statements this all tally's

Pammy

Thanks. But do they expect you have a percentage of money left over? I wondered what this would be.

marlasinger

I expect it's different for each lender.

See the link below for Woolwich's criteria:

http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=homefreeopenplanwealth&value=15125

Batchy

Affordability
The following disposable income figures are our minimum requirements in establishing affordability:

• Single applicant needs £551 per month.
• Two or more applicants need £715 per month.
• Each dependant requires an additional £121 per month

Eg based on these figures, a family of two adults and two children would need a disposable income of £957.

Pammy

Thank you.

So does that mean we 715 between us plus an addional 121?

VIGILANT22

Pammy wrote: »

Thank you.

So does that mean we 715 between us plus an addional 121?

Batchy has taken this from here

http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=popup1openplanwealth&value=15212

However, each lender is different and will look at each individual application...you cannot get 100% answer here........

Pammy

I know that, just looking for some insight.

Thanks

getmore4less

I think a good guide for a couple before housing(mortgage/rent) costs is £1k
This will run a car and still give a decent holiday or two.
Many can get well under this when starting out with a smaller place.

£150 council tax
£150 Bills(gas, electric,tv,phone internet,water)
£200 Food
£200 car
£200 holidays
£100 spends

If you do your own more detailed SOA that will show you what you can afford.

The trick is to not be too tight on the living side of things so you can cut back if needed, having some discretionary spends like holidays in the plan improves flexability.

Pammy

Thanks, that is helpful

Our joint income is £4900 per month

£1200 for the mortgage
£150 council tax
£150 Bills(gas, electric,tv,phone internet,water)
£200 Food
£200 car
£200 holidays
£100 spends

That leaves about £2700

I think thats cool

getmore4less

Plenty of contingency

But use your real numbers based on actual spending habits.
Look at least a years worth of spends and factor in the medium term requirements like replacing white goods and cars.

http://www.makesenseofcards.co.uk/soacalc.html

Also plan the longer term stuff like early retirement savings targets and early repayment of the mortgage.