What do you include in debt to income ratio?

Bm1937

Hi 

my partner and I are hoping to be applying for a mortgage in the coming weeks. I’m just wondering what is exactly included in this and how would you work this out?

my salary is 23.5k and the only outgoings in terms of credit I have is a car loan which is finishing in august/September at £250. Credit card which I use less than 12% of the limit and is paid in full every month (min payment is £25). Phone contract £35 and an arranged £2000 overdraft which occasionally is dipped into by about £300 max. 

Does anyone know how to work out what percentage my debt to income ratio would be please? 

Thanks 

swaledale_one

Have a play with the santander mortgage calculator it's pretty good and you'll find that credit card debt is more favourable than loan debt, regardless of when the loan finishes the payments come off your affordability for the duration of the mortgage...stop using your overdraft as this shows your living beyond your means that is more for your benefit.

[Deleted User]

Are you asking because of Help to Buy equity loan or shared ownership. They have a strict 45% of debt to net income ratio.
There are HTB excel spreadsheets you can complete for London or outside London if you do a search. The debt includes loan payments ( but the Aug / Sep ignore as ends in within 6 months ) and credit card balances ( they work out monthly payment ). Also includes service charge etc 
If its unaffordable it turns red 

Bm1937

swaledale_one said:

Have a play with the santander mortgage calculator it's pretty good and you'll find that credit card debt is more favourable than loan debt, regardless of when the loan finishes the payments come off your affordability for the duration of the mortgage...stop using your overdraft as this shows your living beyond your means that is more for your benefit.

Hi 

thanks for that I’ll have a look. Thanks for all the info!

Bm1937

Densol said:

Are you asking because of Help to Buy equity loan or shared ownership. They have a strict 45% of debt to net income ratio.
There are HTB excel spreadsheets you can complete for London or outside London if you do a search. The debt includes loan payments ( but the Aug / Sep ignore as ends in within 6 months ) and credit card balances ( they work out monthly payment ). Also includes service charge etc 
If its unaffordable it turns red 

HI
we are not using help to buy are shared ownership, we have a LISA for our deposit. So is debt to income only for help to buy then? 

[Deleted User]

Bm1937 said:

Densol said:

Are you asking because of Help to Buy equity loan or shared ownership. They have a strict 45% of debt to net income ratio.
There are HTB excel spreadsheets you can complete for London or outside London if you do a search. The debt includes loan payments ( but the Aug / Sep ignore as ends in within 6 months ) and credit card balances ( they work out monthly payment ). Also includes service charge etc 
If its unaffordable it turns red 

HI
we are not using help to buy are shared ownership, we have a LISA for our deposit. So is debt to income only for help to buy then? 

No all banks use their own affordability calculators but its the HTB that a very strict on the 45%

A broker would know whose debt to income ratio’s are more generous - best to consult one who can explore the whole market 

kingstreet

We would complete the lender affordability calculators and only consider 'debt to income' if we come across a high outstanding amount on credit compared with gross annual income as some lenders might have an issue with this.

Bm1937

Densol said:

Bm1937 said:

Densol said:

Are you asking because of Help to Buy equity loan or shared ownership. They have a strict 45% of debt to net income ratio.
There are HTB excel spreadsheets you can complete for London or outside London if you do a search. The debt includes loan payments ( but the Aug / Sep ignore as ends in within 6 months ) and credit card balances ( they work out monthly payment ). Also includes service charge etc 
If its unaffordable it turns red 

HI
we are not using help to buy are shared ownership, we have a LISA for our deposit. So is debt to income only for help to buy then? 

No all banks use their own affordability calculators but its the HTB that a very strict on the 45%

A broker would know whose debt to income ratio’s are more generous - best to consult one who can explore the whole market 

Ah right ok. We are with trussle at the moment so no doubt they will send us the lenders who’s category we fall into. Thank you!

Bm1937

kingstreet said:

We would complete the lender affordability calculators and only consider 'debt to income' if we come across a high outstanding amount on credit compared with gross annual income as some lenders might have an issue with this.

Great thank you. I earn 23.5k and have around 7k on credit. Nearly 6k of that is my balloon payment on pcp which is due to finish in 3 months