Is mortgage affordability based on net or gross income?

Does the bank base mortgage affordability estimates on gross income or net income?

Greetings,

Swiss banking guidelines state that banks and insurance companies should calculate affordability based on sustainable income and expenses. However, the exact interpretation and implementation of that guidline is left to each lender to decide.

Because of this flexible approach, the way in which affordability is calculated varies between lenders. Some banks and insurance companies use gross income for mortgage affordability calculations, while other use net income.

If the measure of income used is important to you, make sure to ask lenders whether they look at gross or net income before you apply for a mortgage.

When calculating whether or not your can afford a mortgage, it is generally a good idea to estimate your income too low rather than too high. Basing your decision to get a mortgage on the minimum income you are sure you will receive over the long term ensures that you are able to afford a mortgage despite fluctuations in income or expenses.

Best regards from Moneyguru

More on this topic:
Interactive mortgage comparison
Mortgage affordability explained