Are online affordability calculators accurate?

stu2500

Just wondering how accurate these are? I understand a full credit check would follow, but if everything was above board and in order on credit files, are the calculators fairly accurate?

kingstreet

They are as accurate as the data which is entered.

I would be confident of correctly inputting data 99% of the time because it's what we do all day.

If it's new to you, it's possible to miss things like 3% of the loan on an HTB case, or to omit ground rent & service charges, student loan payments etc.

ACG

I have always said the same as Kingstreet.

Last month we had a case on our desk which was hit and miss on affordability. I have a trainee broker, so I double checked her figures. What I got was different to what she had. We then called the BDM and he got different figures to both of us. Turns out one of the questions was about fuel costs for the car. I was putting in what the spent where as the lender only needed to know about fuel for unavoidable travel - ie going to work. Driving to go the local take away at night because you cba walking (for example) would not fall in to that.

So it is important you understand what infromation is actually needed as the questions do not always make it clear.

(for the record, I was closest - the BDM just allowed us to get an extra £500ish).

kingstreet

ACG wrote: »

I have always said the same as Kingstreet.

Last month we had a case on our desk which was hit and miss on affordability. I have a trainee broker, so I double checked her figures. What I got was different to what she had. We then called the BDM and he got different figures to both of us. Turns out one of the questions was about fuel costs for the car. I was putting in what the spent where as the lender only needed to know about fuel for unavoidable travel - ie going to work. Driving to go the local take away at night because you cba walking (for example) would not fall in to that.

So it is important you understand what infromation is actually needed as the questions do not always make it clear.

(for the record, I was closest - the BDM just allowed us to get an extra £500ish).

Nationwide travel costs. It's a right PITA. I wish they'd ask for all of it, not just essential, or use ONS. This halfway house is a nightmare.

ACG

Essential - that was the word I was trying to think of.

Good to know we were not the only ones to be caught out by it.

R&C

Nationwide were only £1k out for us, as in they offered us less than the calculators. I thought that was good, I was expecting more a difference to be honest. We have bonuses & a car allowance to take into account so not just straight salaries.

amnblog

I am so old I was taught to use a slide rule at school (don't ask).

They key thing was to make a rough mental calculation first, so you knew the ball park the slide rule calculation should be in. That way, you knew if you'd got it fundamentally wrong.

The problem with online affordability calculators when used by borrowers is that they have no way of knowing when they have got it 'fundamentally' wrong.

Jkbc90

Not for us, website said for both us and the broker 104k, we were offered 95200. The only debt is £360 on a credit card and no major outgoings, no gym, contract phone, sky, utilities etc. Work contract is temporary ongoing so I don't know if that is the reason why.

ACG

amnblog wrote: »

I am so old I was taught to use a slide rule at school (don't ask).

They key thing was to make a rough mental calculation first, so you knew the ball park the slide rule calculation should be in. That way, you knew if you'd got it fundamentally wrong.

The problem with online affordability calculators when used by borrowers is that they have no way of knowing when they have got it 'fundamentally' wrong.

4.5x income - thats the calculation I use.
If they have £10k plus in debts then I multiply the payment by 48 and deduct that.

Its will never be spot on but I can generally tell if people are wanting to much or not.

amnblog

The key thing is ACG, whether you are on Hfx, Santander, Natinowide whatever... you know if the calculation does not look right and re check it..

mostlynice

I'm pretty sure that the calculator through Santanders website differs from that of Santanders Intermediary website - it has a lot more options to choose from