When applying for a mortgage, affordability is the measure of an applicant’s ability to keep up with the proposed regular repayments.
Affordability is assessed by looking at an individual’s income, assets and liabilities. Lenders consider these factors in order to determine whether an applicant can afford the likely monthly payments.
Affordability checks also take into account other expenses, such as childcare, student loans or transport costs, so it is important to be aware of all financial commitments when applying for a mortgage in order to ensure that your application is successful. Lenders will ask to see your bank statements so they can check how you manage your money.
Secondary checks will also take place to see how the borrower would cope if their interest rate increased. This mortgage stress test used to be mandatory for lenders, but since 2022 they have freedom in how to implement this into their systems.
