Residential cases
Income multiples
The maximum Facility-to-income (FTI) ratio is 4.5. This ratio is applied to the total combined income of all applicants.
Affordability assessment
We assess affordability by deducting the following from total allowable income which gives us the disposable income available for the monthly finance payments:
| Expenditure | Description |
|---|---|
| Basic essential expenditure | The Basic essential expenditure of a customer’s household as disclosed by the customer in the property finance application and evidenced in the bank statements. This expenditure consists of housekeeping (food and washing); gas, electricity, and other heating; water; telephone; council tax; buildings insurance; ground rent and service charge for leasehold properties; and essential travel (including to work or school). |
| Basic quality of living costs | The Basic quality of living costs as disclosed by the customer in the property finance application and evidenced in the bank statements. This expenditure consists of clothing, basic recreation, personal goods, school/childcare fees, and any maintenance payments. |
| Committed expenditure | The Committed expenditure as disclosed in the property finance application is verified to the credit report with payments evidenced in the bank statements. Committed expenditure include mortgage payments (from all the obligors’ properties), personal finance and credit cards. These are commitments that will continue after the finance is provided. |
The bank statements used to evidence should be both from the country of residence and the UK, if applicable.
The monthly finance payments have the following stress-test applied:
| Fixed term | Stress test rate |
|---|---|
| Less than 5 years | Profit rate + 2% |
| 5 years or more | Profit rate |