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Debt to Income Ratio For Mortgage Application
Hi all
When applying for a mortgage does the lender calculate your DTI ration based on your current affairs, or on the predicted one? So for example using rent payment now or what the mortgage payment would be?
Thanks in advance.
Comments
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Debt to income is your current debt (loans, credit cards, leases etc) as a percentage of your income.
It doesnt involve rent (as thats not debt) or the mortgage.
Not all lenders do it and for those who do, how they calculate it will vary from lender lender.
I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.2 -
Each lender has their own processes and metrics. Affordability is a key focus these days, they will consider your outstanding debt, your general living expenses (real or their own view) and confirm you can afford in their view the mortgage repayments.
DTI generally isnt that interesting a metric by comparison. Someone one on £20k income with £10k debt is likely in a worse place than someone with a £200k income and £100k debt (say a PCP car) and yet both have a 50% DTI ratio
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