Loan Affordability Calculator ☆ Save

What a lender approves is not what you can afford

This estimates what you could responsibly borrow. Lenders assess what they can collect — and where repayments are deducted from salary at source, or secured against an asset, they can be comfortable with instalments that leave a household very little.

So being approved is not evidence a loan is affordable. It is evidence the lender is confident of repayment. Those are different questions, and only you can answer the second.

Work from take-home, not gross

Lenders assess against gross income; you live on what actually reaches you after tax and statutory deductions. Get your real figure from the take-home pay calculator and use that here — budgeting on gross typically overstates your capacity by a fifth or more.

Then subtract everything already committed:

• Existing loans, cards and store accounts — and note that a card's minimum payment is not its real cost;
• Rent or home loan, rates, levies, utilities;
• Insurance, medical cover, retirement contributions;
• Transport and fuel — model it in the fuel calculator;
• School fees and family support, which lenders rarely capture but you certainly pay.

The test that matters: your worst month

The usual question is "can I cover this repayment?" The better one is "can I cover it in a bad month and still eat?"

Build the answer around the month when the car needs work, someone is ill, and fees fall due — not the month when nothing happens. A repayment that only works in a good month will eventually be funded by more credit, which is how manageable debt becomes unmanageable.

If the loan is at a variable rate, stress-test it too: could you still pay if rates rose two percentage points? Rates move over the life of a long loan, and the household that budgeted only at today's rate is the one that struggles.

The trap of borrowing from several lenders

Where more than one lender deducts from the same income, each sees only its own instalment. You are the only person with the full picture, and stacking commitments is the most common route into over-indebtedness.

Before adding another, total every existing deduction and check what is genuinely left.

Improve the answer before you apply

1. Check your credit record. Errors are common, and a better record usually means a better rate — which changes affordability more than a small deposit does;
2. Reduce commitments first. Clearing a card raises capacity faster than a raise would, and permanently;
3. Do not apply everywhere at once. Multiple applications in a short window are visible to lenders and can count against you;
4. Build a buffer, so the next surprise is not funded by another credit agreement — project it in the savings calculator.

Frequently asked questions

Why is this lower than a lender offered me?

Because it estimates what is responsible rather than the maximum a provider will extend. Lenders apply their own criteria and their own risk appetite.

What share of income should go to debt?

Rather than a single rule, test the remainder: after every commitment, can you cover a bad month? If not, borrow less or lengthen the term — and compare totals either way.

Does the lender count family obligations?

Usually not. Money you send monthly is a real commitment even though it appears on no statement. Subtract it yourself.

Should I borrow the maximum I qualify for?

Rarely. Qualifying at a number does not mean living comfortably at it, and rate rises land hardest on the borrower who took the maximum.

What if I am already over-committed?

Stop borrowing first — new credit to service old credit accelerates the problem. List every debt with its total repayable, attack the most expensive, and speak to lenders before you default rather than after.

Estimates are indicative; lenders apply their own affordability criteria. General information, not financial advice.