Applying for a loan involves more than just listing your income—managing and declaring your living expenses is equally important. Understanding how to budget and present your financial details can make a significant difference in your application’s success.
To budget effectively, start by reviewing your bank statements to understand your actual spending habits. Use these real figures when filling out your loan application to ensure accuracy. This gives lenders a clearer picture of your financial situation and avoids potential discrepancies.
If your partner contributes to your mortgage or rent payments, you can usually declare only half of the total payment. Some lenders may request proof of your partner’s income, while others might not. Providing payslips for both parties upfront can give you more options, but it’s not always a requirement.
When applying for a loan, you should declare:
Lenders will also review your credit file to check for open loans and credit card balances.
Lenders often use the Household Expenditure Measure (HEM) to calculate your living expenses. This can vary between lenders and is sometimes scaled based on your income. For example:
Lenders will consider the higher amount between your declared expenses and their internal HEM figures to assess your application.
Credit cards are treated as an expense based on their limit, not the balance. For example:
This approach helps lenders account for potential credit usage.
If your living expenses exceed your income, it could affect your ability to repay the loan. For instance:
Each lender has different criteria:
Transparency is key when completing your loan application. Be honest about your financial situation to avoid issues during the assessment process. Using the application form on my website allows me to review your profile and provide more accurate feedback tailored to your situation.
Feel free to contact me if you have any questions or need help managing your living expenses and loan application.