Mortgage affordability calculation

What are the decisive factors in mortgage affordability calculations?

Greetings,

Recurring costs associated with owning a home, such as mortgage amortization payments, mortgage interest charges and property running expenses are included in mortgage affordability calculations.

Other recurring expenses which are completely unrelated to the property must also be accounted for. For example, alimony payments or loan repayments should be included. Each lender has its own criteria regulating which expenses are included when claculating income-to-expense ratios.

Most banks and other lenders will not accept a mortgage if annual costs exceed one-third of annual income. If your ongoing expenses use up more than a third of your income, you will not normally be able to mortgage a home for personal use.

Best regards from Moneyguru

More on this topic:
Interactive mortgage comparison
Mortgage affordability requirements explained
Amortization explained
Personal loan comparison

Hypomat allows for annual costs equal to around 40% of your income.