At a Glance
- Enter your net monthly income, four categories of existing commitment, and the proposed loan details to generate an affordability verdict – how this tool works
- The verdict is based on disposable income as a percentage of net income after all commitments: comfortable at 20% or above, tight between 5% and 20%, unaffordable below 5% – the verdict explained
- Three stress-test scenarios show how the position changes if the loan rate rises by 3%, income falls by 15%, or both occur simultaneously – the stress tests
- The tool does not run a credit check and leaves no footprint on your credit file – all figures are illustrative only and are not a lender affordability assessment – about this tool
- Before applying for a secured loan, use this tool alongside the LTV and equity calculator and the eligibility checker to build a complete picture
Monthly Affordability Checker
Monthly affordability checker
Enter your income, existing commitments, and the loan you are considering to see whether the repayment is affordable – and how it holds up under stress. All figures are illustrative only.
Your income
Use your actual take-home pay after tax and National Insurance
Your existing monthly commitments
Credit cards, loans, car finance – combined minimums
Food, utilities, transport, insurance, subscriptions
Childcare, leisure, clothing – regular discretionary spend
Proposed new loan
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Where your income goes each month
Stress test – what if things change?
These scenarios show how your disposable income changes under pressure. A comfortable baseline that turns unaffordable under stress is worth taking seriously before committing.
Figures are illustrative only and based on the information you enter. This tool is not a lender affordability assessment – lenders apply their own criteria including full income verification, credit checks, and their own stress-testing methodology. Approval is not guaranteed. What feels affordable on a calculator may be assessed differently by a lender depending on your credit profile, existing commitments, and the type of loan. This tool does not constitute financial advice.
About this tool
Most people approach a loan application by asking whether they can afford the monthly payment in isolation. A more useful question is whether the payment is sustainable alongside everything else going out of the account each month. This tool is designed to answer that question by showing the full picture: income, existing commitments, the proposed loan payment, and the gap left after all three.
The tool is particularly relevant for secured loans, where the amounts involved tend to be larger and the repayment terms longer than unsecured products. Understanding your affordability position before applying can help you identify the right loan amount and term, and gives you a realistic sense of the headroom available if circumstances change. Our guide to whether secured loans are a good idea covers the broader decision in more detail.
What it calculates
The tool takes your net monthly income, subtracts four categories of existing spending, then subtracts the calculated monthly payment on the proposed loan. The remaining figure is disposable income. This is expressed as a percentage of net income and mapped to a verdict of comfortable, tight, or unaffordable. The same calculation is then re-run under three stress scenarios to show how resilient the position is.
What it does not do
This tool does not replicate a lender affordability assessment. Lenders verify income, check credit profiles, apply their own stress-test rates, and use their own definitions of committed expenditure. A comfortable result on this tool does not mean an application would be approved, and a tight result does not mean it would be declined. The tool is a planning aid, not a lending decision.
Using your actual figures
The tool is only as useful as the figures entered. Use net take-home pay after tax and National Insurance, not gross salary. For existing debt payments, use the combined minimum monthly payments across all credit cards, loans, and car finance. For essential living costs, include food, utilities, transport, insurance, and subscriptions. Being conservative with income and generous with spending produces the most realistic picture.
Privacy
The tool runs entirely in your browser. No data is sent to any server, stored, or shared. The figures exist only in your current browser session and disappear when you close or reload the page. The tool does not run a credit check and will not affect your credit score in any way.
How this tool works
Adjust the sliders across three sections and the tool updates all outputs instantly. The colour coding on the sliders reflects which part of the budget they relate to: teal for income, amber for existing commitments, and navy for the proposed loan.
Set your net monthly income
Use the income slider to enter your take-home pay after tax and National Insurance. This is the figure that all percentages in the tool are calculated against. If income varies month to month, use a conservative estimate of a typical lower month rather than a high month. For joint applications, you can combine household income, but also combine all household commitments in the next step.
Enter your existing monthly commitments
The four commitment sliders cover housing costs (rent or mortgage payment), existing debt repayments (combined minimums on all credit cards, loans, and car finance), essential living costs (food, utilities, transport, insurance, subscriptions), and other regular spending (childcare, leisure, clothing). These four categories cover the main areas lenders consider in affordability assessments. Adjust each slider to reflect your actual monthly spend in that category.
Set the proposed loan details
Enter the loan amount, APR, and term you are considering. The monthly payment is calculated using standard amortisation and updates instantly. If you are not sure what APR to use, the APR band cost comparator shows what different rates cost in practice. Try different combinations of amount and term to find the repayment level that produces a comfortable or tight verdict without an unaffordable stress-test result.
Read the verdict, waterfall, and stress tests
The verdict banner shows the disposable income remaining after all commitments including the loan, with a colour-coded classification. The budget waterfall shows visually where income goes each month. The disposable bar shows the percentage left. Below the divider, three stress-test cards show the same calculation with a rate increase, an income reduction, and both combined. A comfortable baseline that becomes unaffordable under stress is worth reconsidering before committing.
The verdict explained
The verdict is based on one number: disposable income as a percentage of net monthly income, after all commitments including the proposed loan payment. The three tiers reflect broadly accepted affordability thresholds.
Comfortable: 20% or above
At least one pound in five of net income remains after all commitments. This is generally considered a sustainable position for most households. It provides a buffer against unexpected costs, interest rate changes, and temporary income reductions. A comfortable verdict does not mean the position is risk-free, and the stress tests may still show the buffer eroding under pressure.
Tight: between 5% and 20%
The loan is within a serviceable range, but the remaining headroom is limited. A tight verdict means any unexpected cost or income reduction is more likely to create difficulty. It is worth considering whether a smaller loan amount, a longer term, or a lower APR would move the position into the comfortable zone. The stress tests are particularly important to review when the baseline verdict is tight.
Unaffordable: below 5%
Less than one pound in twenty of net income remains after all commitments, or commitments exceed income entirely. At this level, the loan as structured is likely to create sustained financial pressure. Reducing the loan amount, extending the term, securing a lower APR, or paying down some existing commitments before applying are options worth exploring. Our guide to what happens if you cannot repay a secured loan is worth reading before proceeding.
How the loan payment is calculated
The monthly payment uses standard amortisation: M = P x r(1+r)^n / ((1+r)^n – 1), where P is the loan amount, r is the monthly interest rate (APR divided by 1,200), and n is the term in months. This is the same method lenders typically use for fixed-rate instalment loans. It assumes a fixed rate throughout and does not account for any arrangement fees added to the loan.
The stress tests
The three stress scenarios run immediately below the main verdict and disposable bar. They are independent of each other and recalculate automatically as you adjust the sliders. Each scenario applies a single shock to the baseline position.
Rate +3%
The proposed loan APR rises by 3 percentage points. All other figures remain unchanged. This scenario is relevant for variable-rate or tracker-rate secured loans where the rate can change during the term. It is less relevant for fixed-rate products, but still useful as a general resilience check. If this scenario converts a comfortable verdict to unaffordable, the baseline headroom is relatively thin.
Income -15%
Net monthly income falls by 15%. All commitments, including the proposed loan payment, remain unchanged. A 15% income reduction is a reasonable proxy for a part-time shift, a period on sick pay, a change in employment status, or the loss of a second income in a household. This scenario tests whether the loan would remain manageable through a period of reduced earnings. Our guide to fixed versus variable rates for secured loans covers how rate type interacts with income risk.
Both combined
The rate rises by 3 percentage points and income falls by 15% simultaneously. This is the worst-case scenario for the combination of inputs entered. A comfortable verdict in this scenario indicates a genuinely resilient position. An unaffordable verdict here is not necessarily a reason to abandon the loan, but it does indicate the position depends on income and rate conditions remaining stable throughout the term.
How lenders use stress tests
Most lenders apply their own stress rates when assessing secured loan applications, typically adding a buffer of 1 to 3 percentage points above the product rate. The FCA requires lenders to assess affordability not just at the current rate but at a rate that accounts for potential increases over the life of the loan. This tool models a simplified version of that approach. Actual lender stress-test methodology varies and is not disclosed publicly.
Frequently asked questions
What counts as existing debt payments in the tool?
The existing debt payments slider should include the combined monthly minimums across all credit accounts, loans, and finance agreements that require a monthly payment. This includes credit card minimum payments, personal loan instalments, car finance payments, store card minimums, and any existing secured loan payments. It does not include your mortgage or rent payment, which is captured separately in the housing slider.
Using actual minimum payment figures produces the most accurate result. If you are paying more than the minimum on any account, you can choose to enter the higher amount if you intend to maintain that payment level after taking the new loan. However, entering the minimums gives a more conservative and generally more useful picture of the baseline commitment level that will continue regardless of what you choose to pay.
Why does the tool use net income rather than gross salary?
Disposable income is the money actually available to spend and save after deductions. Gross salary does not reflect what arrives in the bank account each month, and using it would overstate the gap between income and commitments. Net income after tax and National Insurance is the correct figure for a household budget calculation.
The practical effect is that the disposable percentages shown in this tool will typically look tighter than figures based on gross income. This is deliberate. It is better to plan from a conservative base and find the position is more comfortable in practice than to plan from an inflated income figure and find the loan is harder to sustain than the tool suggested. If your income includes bonuses or irregular payments, use a base income figure that represents a normal month rather than a high month.
How does this tool differ from the secured loan calculator?
The secured loan calculator focuses on the loan itself: monthly payment, total interest, and total amount repaid at different amounts, rates, and terms. It is useful for comparing loan structures and understanding what a given loan would cost.
This affordability checker takes the loan payment as one input alongside your full household budget and asks a different question: is this sustainable? It shows where the payment sits in the context of everything else you spend, identifies the verdict tier, and stress-tests the position. The two tools work well together. A reasonable workflow is to use the loan calculator to identify a loan structure that seems appropriate, then bring that into the affordability checker to test it against your actual income and commitments before applying.
The tool says comfortable but I am still not sure. What should I do?
A comfortable verdict means the figures entered produce more than 20% disposable income after all commitments. It is a positive signal but it does not mean the loan is right for your situation. There are several things worth checking before proceeding. Review the stress-test results to understand how robust the comfortable position is. Consider whether the income figure entered is truly representative of a typical month. Check whether the essential living costs figure captures all regular spending, including items that only occur quarterly or annually if smoothed to a monthly equivalent.
If the comfortable verdict holds up across the stress tests and the figures entered are accurate, the next step is to understand what a lender would make of the application. The eligibility checker gives a sense of which credit profile tier the application is likely to fall into, and our guide to how secured loans affect your credit score explains what happens once an application is submitted.
Can I use this tool for a joint application?
Yes. For a joint application, enter the combined household net income and the combined household commitments across all four sliders. This gives a household-level affordability picture rather than an individual one. Most lenders assess joint applications on household income and combined expenditure, so this approach aligns with how a lender would typically model the position.
One practical consideration for joint applications is the income stress test. A 15% reduction in household income is a different scenario depending on whether the household has one income or two. In a two-income household, a 15% reduction could represent one income falling modestly. But the more material stress scenario for a two-income household is often the complete loss of one income, which would represent a 40 to 50% reduction depending on the income split. You can test this by manually reducing the income slider to represent the lower-earning partner’s income alone, to see whether the loan remains manageable on a single income.
Squaring Up
An affordable loan is not just one where the monthly payment fits. It is one where the payment fits alongside everything else, with enough left over to absorb a bad month. The disposable income percentage and the stress tests together give a more complete picture than the payment figure alone.
- Be conservative with the income figure. Use net take-home pay in a typical month, not a high month or a gross salary figure.
- Include all commitments. The four sliders work best when every regular outgoing is represented. Missing items overstate the disposable income and produce an optimistic verdict.
- Check the stress tests even when the baseline is comfortable. A comfortable baseline that turns unaffordable under a 15% income reduction warrants a second look before committing to a long term.
- This tool is a planning aid, not a lending decision. Lenders assess income differently, apply their own stress rates, and check credit profiles. Use this alongside the eligibility checker and the LTV calculator before applying.
If the position looks manageable and you are ready to explore options, the tools below cover the next steps.
Ready to see what you could borrow?
Checking won’t harm your credit score Check eligibilityAll figures produced by this tool are based on the information you enter and are illustrative only. The tool does not constitute a lender affordability assessment. Lenders apply their own criteria including full income verification, credit checks, and their own stress-testing methodology. A comfortable result does not guarantee that any application would be accepted. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. This tool does not constitute financial advice.
