Debt ratio for mortgage

toc25

Hi, I'm hoping someone can help me understand the debt ratio thing I keep seeing being mentioned. How do I work this out for ourselves? We have an appointment with a mortgage advisor next week and don't want to look stupid.
I have googled it and just keep finding American websites.

Thanks in advance

hounsehunterftb

Its basically weighing of your monthly incomings and outgoings.
incomings-outgoings = disposable income.
incomings = salary + bonus + etc
outgoings = credit card + loans + daily expenses + food + bills

disposable income = The amount that's left which would be the basis for how much a lender is ready to lend you.

There is no specific ratio as such. It should be enough for you to do your mortgage payments and a safety net required if the interest rates ever rise exorbitantly.

toc25

Thank you

I have seen people saying something about a 30% Debt to income ratio though? Is that not a thing?

I was wondering how I would work out what our debt to income ratio is and if it's the pre tax income you use to work it out?

kingstreet

There is no published debt to income ratio.

Nine times out of ten, if your chosen lender's affordability calculator indicates your mortgage is affordable, it will be agreed when you apply.

If you have doubts, appoint an independent broker.

toc25

Thank you, I've used lots of affordability calculators with accurate income and debt repayments and they all seem to say we could borrow more than we need. I'm just a bit paranoid, I think the more posts I read the more doubtful I become.

ACG

Some lenders have a cap in place of how much debt you can have as a percentage of your income. That cap varies from around 30-50%. Some lenders do not have a cap at all.

Not knowing this iniformation will not make you look stupid. If you have a lot of debt, it is the brokers job to find the right lender for you.

jlaw4

I didn't know about it until i went to an EA broker and he worked ours out to be just over 30% for a BOI mortgage but he was an utter moron using scare tactics as i already have a fee free MA that is brilliant and he was trying to convince me i needed him so go to an independant broker that knows there stuff! You don't really need to know criteria for a lender, thats why the broker is appointed to place you with the right lender.

toc25

We used that type of broker the first time, won't be making that mistake again!
Thanks and hope that you manage to get yours sorted ��