Debt to income ratio calculation

spriggsy

When it comes to calculating debt to income ratio, I understand it's a case of working out the monthly amount of debt and dividing by my gross monthly income to work out the percentage.

How is this calculated for someone who is self employed because you have to provide last 2 years earnings rather than your salary? Would it be last 2 years earnings divided by 24 to get an average monthly figure? Or is it done differently?

Thanks in advance.

kingstreet

We just use the affordability calculators the lenders give us we don't get to know the ins and outs.

Brokers know the lenders who will have an issue with large-scale unsecured debt and those who won't.

Thrugelmir

spriggsy wrote: »

When it comes to calculating debt to income ratio, I understand it's a case of working out the monthly amount of debt and dividing by my gross monthly income to work out the percentage.

Depending on the circumstances of the application. An underwriter would most likely take a more considered approach rather than using a simple formula. Trends for example.