Just 4 Mortgages
Debt To Income Ratio Guide
Guide
What is Debt-to-Income ratio and why is it important to lender?
Debt-To-Income is a metric that measures how much of your income is going towards paying for your debts. This shows the lenders how much you are currently spending on debt and if it is feasible to add a mortgage. A lower ratio shows that you have more income available to go towards your monthly mortgage payments and makes you a lot more attractive to lenders.
How to calculate this at home
1.Add up your monthly debt payments
2.Work out your gross monthly income
3.Divide the total monthly debt payments by your gross monthly income
4.Multiple the results by 100 to get your ratio as a percentage
An example
Total monthly debt is £500
Gross monthly income is £2,000
£500/£2,000 x 100 = 25% of your income goes towards paying off your debts
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but a typical fee will be £494