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  • FIRST POST
    • horngkai
    • By horngkai 18th Jun 13, 4:03 PM
    • 565Posts
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    horngkai
    What is considered as financial commitment in mortgage calculator?
    • #1
    • 18th Jun 13, 4:03 PM
    What is considered as financial commitment in mortgage calculator? 18th Jun 13 at 4:03 PM
    Was playing around with the mortgage affordability calculator and feeling a little confused about what is counted as regular financial commitment. I presumed personal/car loan, childcare will be considered as financial commitment but what about things like expenses, council tax, utilities, insurances? Thanks for your advice.
Page 1
    • kingstreet
    • By kingstreet 18th Jun 13, 4:07 PM
    • 34,490 Posts
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    kingstreet
    • #2
    • 18th Jun 13, 4:07 PM
    • #2
    • 18th Jun 13, 4:07 PM
    The calculators can normally cope with the usual expenses, so you can safely leave them out. If your bank statements show large-scale expenses, such as childcare, maintenance, loans, HP, credit card payments, service charges/shared ownership rent etc or you will have these to pay after you move, it's a good idea to put them in to ensure the output is correct.

    Some lenders ignore student loans, others ask for them to be entered, so take care there too.
    I am a mortgage broker. You 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. Please do not send PMs asking for one-to-one-advice, or representation.
    • horngkai
    • By horngkai 18th Jun 13, 4:20 PM
    • 565 Posts
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    horngkai
    • #3
    • 18th Jun 13, 4:20 PM
    • #3
    • 18th Jun 13, 4:20 PM
    What is consider as maintenance cost? Do they take into account car insurance as well?

    Also, how do they calculate salary when there is salary sacrifice involve? I normally pay childcare by salary sacrifice.
    Last edited by horngkai; 18-06-2013 at 4:30 PM.
    • kingstreet
    • By kingstreet 18th Jun 13, 4:29 PM
    • 34,490 Posts
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    kingstreet
    • #4
    • 18th Jun 13, 4:29 PM
    • #4
    • 18th Jun 13, 4:29 PM
    Maintenance payments to a previous partner for children who do not live with you.
    I am a mortgage broker. You 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. Please do not send PMs asking for one-to-one-advice, or representation.
    • Dan-Dan
    • By Dan-Dan 18th Jun 13, 4:30 PM
    • 4,961 Posts
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    Dan-Dan
    • #5
    • 18th Jun 13, 4:30 PM
    • #5
    • 18th Jun 13, 4:30 PM
    I think kings is saying anything which is above and beyond `usual` household expenses

    edit : regards your car insurance question..
    Last edited by Dan-Dan; 18-06-2013 at 4:32 PM.
    • melj16
    • By melj16 18th Jun 13, 8:45 PM
    • 128 Posts
    • 27 Thanks
    melj16
    • #6
    • 18th Jun 13, 8:45 PM
    • #6
    • 18th Jun 13, 8:45 PM
    you do not need to input your household bills i.e council tax, electricity. You only need to enter credit commitments, loans credit cards balances etc. The calculator has a set amount they expect you to spend on the other bills depending on the number of applicants and dependents.
  • ffor99
    • #7
    • 18th Jun 13, 8:48 PM
    • #7
    • 18th Jun 13, 8:48 PM
    When I applied for my mortgage (HSBC) they counted car insurance, mobile and broadband contracts as financial commitments but did not include things like food, gym membership (anything variable that isn't required to be paid by law).

    The bank were more concerned about my net monthly salary as this would have already taken not account any student loan deductions and pension contributions. Again each lender will assess income slightly differently.

    With regards to utility bills, building insurances, council tax etc, the lender will factor in an average cost in order to assess your total affordability.

    After I went through everything, the person going through my application asked me whether the total estimated outgoings that she had calculated were ok for me to commit to. I'm guessing that by that question there is always a little bit of lee way.
    • gazter
    • By gazter 18th Jun 13, 11:55 PM
    • 919 Posts
    • 717 Thanks
    gazter
    • #8
    • 18th Jun 13, 11:55 PM
    • #8
    • 18th Jun 13, 11:55 PM
    Some lenders are much fussier than others. Things that are always included, debt repayments, credit obligations like car loans, child maintenance. Things that are always excluded, existing household related costs, existing mortgage.

    After that it gets fuzzy, most seem to include student loans, some dont, some include pension contributions. Seriously...

    My good lady puts 8% into her company pension, that in essence took 2,000 off the salary for the multipliers. They treat an annual 2,000 contribution to a pension scheme the same as a 2,000 a year car loan obligation.
    • kingstreet
    • By kingstreet 19th Jun 13, 6:59 AM
    • 34,490 Posts
    • 18,730 Thanks
    kingstreet
    • #9
    • 19th Jun 13, 6:59 AM
    • #9
    • 19th Jun 13, 6:59 AM
    Don't confuse the affordability calculator used to establish borrowing power with the budget planner which forms part of some lenders' mortgage application.

    The data entry and reason for these is different.
    I am a mortgage broker. You 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. Please do not send PMs asking for one-to-one-advice, or representation.
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