Affordabilty calculations - % of overdraft and credit card

KingHenryVIII

Hi, I have been talking to a couple of potential lenders re a remortgage. There seems to be a variance in their affordability calculations where some lenders will calculate a % (2-3%) of the debt and some will take the min. monthly payment, has anyone else experienced this? Is this normal?

Thanks,
KH

ACG

Its normal in the sense that there is no normal.

All lenders have their own methods - if affordability is tight, its a case of finding where it will fit.

amnblog

KingHenryVIII wrote: »

Hi, I have been talking to a couple of potential lenders re a remortgage. There seems to be a variance in their affordability calculations where some lenders will calculate a % (2-3%) of the debt and some will take the min. monthly payment, has anyone else experienced this? Is this normal?

Thanks,
KH

If you believe you have a fix on how lenders calculate affordability, think again.

Since April it is a lot more complex than x% of y times z

KingHenryVIII

It would be good to have a resource of each lenders formula for affordability, if nothing else it would make interesting reading!

betmunch

KingHenryVIII wrote: »

It would be good to have a resource of each lenders formula for affordability, if nothing else it would make interesting reading!

One might almost make a profession out of it!

ACG

Very few lenders release their calculations.

It would be nice to be able to put a spreadsheet together where you put in relevant figures and then it will display how much each lender would lend - sadly that does not happen. I only know of 2 lenders where I can manually work out how much they would lend if I really wanted to.

Mortgage_Mark_2

As above, different lenders have different calculations.

Halifax take 5% of any credit card balance, Clydesdale Bank 3%. Clydesdale Bank however have a 'debt servicing calculation' that they run which restricts expenditure on essential commitments such as ongoing credit commitments, new mortgage, household essentials and insurances etc, to 50% of net income.

It really isn't as easy as taking £XXX on it - most lenders have some form of affordability calculator, and you'd need to rely solely on that really.

amnblog

Mortgage_Mark wrote: »

It really isn't as easy as taking £XXX on it - most lenders have some form of affordability calculator, and you'd need to rely solely on that really.

Plus you need to know what goes where, and that is a science it itself.