Loan Eligibility Calculator

What lenders actually assess

Three things dominate. Income multiples set a ceiling, commonly four to five times gross annual income for a mortgage. Affordability testing then checks whether the payment fits after existing debts and living costs, at a stressed interest rate rather than today's. Credit history determines whether you are offered the best pricing, a worse rate, or nothing. All three must pass; a strong income does not compensate for recent missed payments.

Existing debt reduces borrowing faster than you expect

A car loan with a substantial monthly payment can reduce mortgage borrowing capacity by many multiples of the payment itself, because the lender subtracts the commitment from affordable income and then applies the multiple. Clearing a small loan entirely before applying often raises the offer by far more than the loan's balance. A credit card with a zero balance still counts in some assessments, since the limit represents available credit you could draw.

What counts as income

Basic salary counts fully. Bonus, commission and overtime are typically counted at 50 to 100 percent depending on how reliably they are evidenced, usually needing two years of history. Self-employed income is generally assessed on two or three years of accounts, often on the lower of the average and the most recent year, which penalises a growing business. Benefits and rental income are treated inconsistently between lenders, which is why offers vary so widely for the same applicant.

Term changes capacity

A longer term lowers the monthly payment, which raises the amount affordable. It also increases total interest substantially, and lenders cap the term against retirement age. Extending from 25 to 35 years increases borrowing capacity noticeably and costs a great deal more over the life of the loan.

An estimate is not a decision

These figures are indicative. An agreement in principle is a soft assessment; the underwriter sees bank statements and looks at actual spending, and gambling transactions, undisclosed commitments or irregular income can change the answer at full application.

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