Debt to income ratio question

Volpe

Hi, I’m looking for a bit of advice about debt to income ratio around re- mortgaging. 

My husband and I have quite a high DTI at present (around 50%) (2,400/4,800), debt comprising half of a mortgage repayment and other half in loans/ credit cards. We pay back every month and have ‘excellent’ credit scores. 

We are looking to remortgage in September but we’ve been advised that our DTI ratio might be a problem. I get that it’s a problem now - if I was looking for another loan (I’m not) it would be very unlikely I would get one- but why when we remortgage? 

We would be looking to add £40k to the mortgage and that amount wouldn’t massively raise our existing mortgage repayment and would clear every other debt, so our DTI, if we could remortgage and get rid of the other payments, would be about 28%. 

Am I right in thinking that the DTI is calculated on a proposed scenario -ie what you would be repaying if you get the financial product in question, not what it is at that exact moment in time? Or do we have a problem? There is enough equity and our income is fine for the new proposed mortgage amount. Thanks! 

K_S

@volpe DTI is used differently by different lenders. Some have a clear limit, some have it as a factor in their "credit-scoring,", some don't look at it as a factor by itself, etc.

Affordability is also looked at differently, some will assume the current debt as ongoing even if they are going to be consolidated, some will look at it as per after completion when the debt is paid off.

Capri84

It’s nuts really as the day after you get the keys you could go out and spend your credit cards to the Max, take out a loan etc etc 

ACG

Debt to income ratios do not usually take into account your mortgage repayments as far as I am aware. 
It would usually be things like leases, credit cards, loans etc. 

I dont think there is an issue here to be honest, but worth checking with the lender you intend on applying to before doing any credit checks. 

[Deleted User]

Also it tends to be on the total balance of unsecured credit as a ratio of your income as calculated by the lender.  

The monthly payment aspect is dealt with in the affordability calculator.