Loan Affordability Calculator
Our loan affordability calculator estimates the maximum loan amount you can comfortably repay based on your income and monthly outgoings — helping you borrow within your means and avoid overcommitting before speaking to a lender.
Loan Affordability Calculator
Find out the maximum loan amount you could afford based on your income and outgoings.
How Loan Affordability Is Determined
UK lenders assess affordability by comparing your net disposable income against the proposed monthly repayment. Total monthly debt repayments (including the new loan) should not exceed 35–40% of gross monthly income. For someone earning £35,000 per year (£2,917 gross per month), the maximum monthly repayment budget is approximately £1,021 (35%). With existing monthly debt commitments of £300, the new loan repayment capacity is £721 — which at 9.9% APR over 3 years supports a loan of approximately £22,000. Maintain your emergency fund alongside any borrowing. Our Emergency Fund Calculator helps you size the buffer to maintain, and our Personal Loan Calculator models the exact repayment at any rate and term.
The Full Cost of Borrowing
Lender affordability calculations focus on your monthly repayment relative to income. But the full cost of borrowing also includes the total interest paid over the loan term, the opportunity cost of those repayments versus saving or investing, and the risk premium of being over-committed if your income falls. A loan that is technically affordable at current income may become unmanageable after a job change, income reduction, or unexpected expense. Building in a safety margin — aiming for repayments at no more than 25–30% of take-home rather than the 35–40% maximum — gives resilience against the unexpected. Always check that your emergency fund target is funded before committing to a new loan repayment.
Frequently Asked Questions
No — lenders conduct their own assessment using credit file data, bank statements, and proprietary models. This provides a planning estimate, not a guaranteed lending decision.
Yes — include all committed monthly debt repayments including mortgage, car finance, existing loans, and credit card minimum payments.
Self-employed applicants typically need 2–3 years of accounts or SA302 tax returns. Lenders often use an average of recent years of profits.
Yes — joint applications combine both incomes, significantly increasing the maximum affordable loan. Both credit profiles are assessed.
Salary sacrifice pension contributions reduce your net take-home pay, which lenders count as a committed outgoing, reducing assessed affordability for new borrowing.
Enter your net monthly income — take-home after tax and NI — and all existing committed monthly outgoings: rent or mortgage, existing loan repayments, car finance, insurance minimums, and subscriptions you cannot cancel quickly. The loan APR and term determine the proposed monthly repayment. The affordability ratio compares proposed total committed outgoings against income — most lenders prefer this to remain below 40-45% of net income. If the proposed repayment pushes you above this level, consider a longer term (lower monthly payment but more interest total) or a smaller loan amount. This calculator shows lender-style affordability rather than a personal budget view.
Important Information
This calculator is provided for general information and planning purposes only. It does not constitute financial or tax advice and should not be relied upon as such. Figures are indicative estimates based on simplified, publicly available criteria and stated assumptions. Actual results depend on your full circumstances. See our Disclaimer for further information.