---
title: "Mortgage Declined on Affordability, Why Lenders Differ"
description: "Mortgage declined on affordability: how lenders calculate it, stress rates and income multiples, commitments and childcare, and what changes the answer."
url: "https://mortgagelane.com/mortgages/mortgage-declined-on-affordability"
site: "Mortgage Lane"
collection: "mortgages"
date: "2026-10-08"
author: "Joseph Lane"
category: "Mortgages"
reviewed: "2026-10-12"
reading_time: "31 min"
byline: "Joseph Lane"
author_credentials: "CeMAP · FCA authorised firm"
language: "en-GB"
robots: "index,follow"
---

# Mortgage Declined on Affordability, Why Lenders Differ

Mortgage declined on affordability: how lenders calculate it, stress rates and income multiples, commitments and childcare, and what changes the answer.

Mortgage declined on affordability: how lenders calculate it, stress rates and income multiples, commitments and childcare, and what changes the answer.

[Affordability stress rate](https://mortgagelane.com/definitions?term=affordability-stress-rate)

Lending and affordability

The higher interest rate a lender uses to check that a residential mortgage would still be affordable if rates rose. Each lender sets its own within the FCA's rules.

[Read the full definition of Affordability stress rate](https://mortgagelane.com/definitions?term=affordability-stress-rate)

## Expert advice on a mortgage declined on affordability

Speak to a Mortgage Lane adviser about your options.

## In short

A mortgage declined on affordability means one lender's assessment found that your income, after commitments and household costs, would not support the loan at the rate it tested. Lenders each set their own income rules, cost assumptions, stress rate and income multiple, so another lender can reach a different answer on the same figures. Clearing a commitment, lengthening the term or adding an applicant can also change the result.

## What is a mortgage declined on affordability?

**A mortgage declined on [affordability](https://mortgagelane.com/definitions#def-affordability) means the lender's model has concluded that your income, after commitments and household costs, will not comfortably support the loan you asked for at its stressed interest rate.** Each lender builds its own model: what income it counts, how it treats overtime, bonus and [self-employed profit](https://mortgagelane.com/definitions#def-net-profit), the household cost assumptions it uses, how heavily it weighs credit commitments, childcare and dependants, and the rate at which it tests payments. So one lender can decline an applicant that another approves for the same loan. Clearing a commitment, lengthening the term, adding an applicant or moving to a lender whose model reads your income better can each change the answer.

An affordability decline is a lender's refusal to lend the amount you asked for because its assessment of your income and expenditure does not support it. Lenders make that assessment under the [Financial Conduct Authority](https://mortgagelane.com/definitions#def-financial-conduct-authority)'s responsible lending rules, part of [MCOB](https://mortgagelane.com/definitions#def-mcob). A mortgage on a home you will live in is normally a [regulated mortgage](https://mortgagelane.com/definitions#def-regulated-mortgage); the legal test is that at least 40% of the property is used as a dwelling ([legislation.gov.uk: Regulated Activities Order, article 61](https://www.legislation.gov.uk/uksi/2001/544/article/61)). For those mortgages the lender must take full account of your income net of income tax and National Insurance, your [committed expenditure](https://mortgagelane.com/definitions#def-committed-expenditure) such as credit payments, and the basic essential and quality-of-living costs of your household, and it must allow for likely future interest rate rises ([FCA Handbook: MCOB 11.6.5R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). It must also obtain evidence of the income it counts, and it cannot rely on a general statement from you that the loan is affordable. Lenders also cap the loan at an [income multiple](https://mortgagelane.com/definitions#def-loan-to-income), and loans at 4.5 times income or more count towards the Bank of England's limit on high loan to income lending; the criteria section below covers both. The same rules apply in England, Wales, Scotland and Northern Ireland.

An affordability decline is one of several kinds. A lender can also turn a case down because of the property, because of what its [underwriting](https://mortgagelane.com/definitions#def-underwriting) finds in the documents or because of the credit file, and our pages on a [mortgage declined on valuation](https://mortgagelane.com/mortgages/mortgage-declined-on-valuation), a [mortgage declined at underwriting](https://mortgagelane.com/mortgages/mortgage-declined-at-underwriting) and [low credit score mortgages](https://mortgagelane.com/mortgages/low-credit-score-mortgages) deal with each of those. An offer can even be withdrawn late, as our page on a [mortgage declined after exchange](https://mortgagelane.com/mortgages/mortgage-declined-after-exchange) explains. The [declined mortgages](https://mortgagelane.com/insights/declined-mortgages) page sets out every type of decline and what to do next. Buy to let and commercial mortgages are tested mainly on rent or business income; our article on [buy to let and commercial mortgages declined on affordability](https://mortgagelane.com/insights/what-to-do-if-your-mortgage-is-declined-on-affordability) covers them.

Mortgage Lane helps buyers and remortgagers declined on affordability, including single applicants, families with childcare costs, borrowers with car finance or [student loans](https://mortgagelane.com/definitions#def-student-loan-repayment-plan), people with variable or self-employed income, and older borrowers whose term is limited. Before any new application we model the case across lenders, and we choose the next lender by how its assessment reads your figures. Our page on [low income mortgages](https://mortgagelane.com/mortgages/low-income-mortgages) covers cases where a modest salary limits the loan.

## Mortgage rates and affordability: the stress rate

**Lenders test affordability at a stressed rate they set themselves, usually above the product rate you will pay.** Each lender sets its rates for each product and [loan to value](https://mortgagelane.com/definitions#def-loan-to-value) band, and prices a case that needs [specialist lending](https://mortgagelane.com/definitions#def-specialist-lending) against its own criteria. The [stress rate](https://mortgagelane.com/definitions#def-affordability-stress-rate) is the rate at which the lender checks that you could still pay. Under FCA rule MCOB 11.6.18R a lender must consider likely interest rates over at least the first five years, having regard to market expectations, and must assume they rise by at least 1% over that period ([FCA Handbook: MCOB 11.6.18R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). That five-year test does not apply where the rate is fixed for five years or more, so some lenders test a five-year [fixed rate](https://mortgagelane.com/definitions#def-fixed-rate-mortgage) at or close to the pay rate, which can increase the amount they will lend.

The rule does not say which rate the test must start from. In March 2025 the FCA reminded lenders that many build the test by adding a margin to their [reversion rate](https://mortgagelane.com/definitions#def-standard-variable-rate), which can make the test unnecessarily high where that rate does not reflect market expectations. In December 2025 it concluded that no further change to the rule was needed ([FCA: interest rate stress test rule](https://www.fca.org.uk/firms/interest-rate-stress-test-rule)). The Bank of England's separate affordability test, which checked payments at a rate 3 percentage points above the reversion rate, was withdrawn on 1 August 2022 ([Bank of England: withdrawal of the affordability test](https://www.bankofengland.co.uk/paper/2022/an-fpc-response-consultation-on-withdrawal-of-the-affordability-test-recommendation)). Each lender now sets its own stress rate, which is one reason the same income can pass with one lender and fail with another. When you compare products, the length of the fix matters as well as the rate and the fee. Our [fixed term mortgages](https://mortgagelane.com/mortgages/fixed-term-mortgages) page explains how fixed rates are priced.

**Declined on affordability?** Get in touch with your income, commitments and household details. We model the loan across lenders before you apply again.

A rate fixed for five years or more sits outside the FCA's five-year stress test, which assumes a rise of at least 1%, so some lenders test such a fix at or close to the pay rate, which can raise the loan.

## Mortgage affordability criteria: what assessments use

**Every affordability assessment uses the same inputs, and each lender sets its own rules for them.** In the table below, the basic income, commitments, childcare, stress rate and term rows rest on the FCA's rules, the 4.5 times line on the Bank of England, and the income multiple row on Mortgage Lane's experience. In our experience the standard income multiple is 5 times gross income after credit commitments, up to 6 times for professionals and specialist products. A loan within the multiple can still fail the affordability test, which looks at what is left after outgoings. The FCA allows a lender to cap lending at a multiple of income only if it can still show the loan is affordable (MCOB 11.6.7G).

Loans at 4.5 times income or more also count towards the Bank of England's limit on high loan to income lending, which keeps such loans to no more than 15% of new mortgages across the market. Since July 2025, lenders subject to the limit have been able to apply to go above 15% individually, under interim measures that run to 31 December 2026 at the latest. The [Prudential Regulation Authority](https://mortgagelane.com/definitions#def-prudential-regulation-authority) (PRA) and the FCA consulted in April 2026 on making that change permanent, and as at October 2026 the final rules had not been published ([Bank of England: high loan to income lending](https://www.bankofengland.co.uk/prudential-regulation/publication/2026/april/high-loan-to-income-lending-consultation-paper)). Lenders therefore manage how many of those loans they make, and some keep them for higher earners or particular professions.

## What affordability assessments use

*What affordability assessments use*

| Criterion | How lenders treat it |
| --- | --- |
| Basic income | Usually counted in full. The affordability test works on income after income tax and National Insurance. |
| Overtime, bonus and commission | Counted in full, in part or as an average, depending on the lender. The share and the period vary widely. |
| Self-employed income | Net profit, a share of partnership profit, or salary and dividends, depending on the business. Each lender sets its own method. |
| Other income | Some benefits, rental income and maintenance can count. Which ones, and how much of each, varies by lender. |
| Credit commitments | Monthly payments are taken off. Some lenders count a percentage of credit card balances as a monthly cost. |
| Childcare and school fees | Taken into account as outgoings. The FCA lists childcare among the basic quality-of-living costs a lender allows for. |
| Dependants | Raise the household costs the lender assumes. |
| Student loan | The payroll deduction reduces take-home pay. Lenders differ on how they count it. |
| Pension contributions | Reduce take-home pay. Each lender sets its own approach. |
| Stress rate | The lender's own rate for at least five years ahead, assuming a rise of at least 1%. A rate fixed for five years or more is outside that test. |
| Term and age | Payments are tested over the full term. Where the term runs past retirement, the lender assesses income in retirement. |
| Income multiple cap | In our experience 5 times income after credit commitments, up to 6 times for professionals and specialist products. Loans at 4.5 times income or more count towards the Bank of England's limit. |

The basic income row is from FCA rule MCOB 11.6.5R, the commitments and childcare rows from MCOB 11.6.10R to 11.6.12R, the stress rate row from MCOB 11.6.18R, the term row from MCOB 11.6.15G and the 4.5 times line from the Bank of England, checked 8 October 2026. The income multiple row is Mortgage Lane's experience, not a market rule. The other rows describe how lenders vary; each lender's criteria and underwriting decide a case.

## What reduces affordability, and how lenders treat each

**Commitments, childcare, payroll deductions, [variable income](https://mortgagelane.com/definitions#def-variable-income) and age can all reduce the loan an affordability assessment supports, and lenders weigh each of them differently.**

### Credit commitments

Car finance, personal loans, buy now pay later and credit card balances reduce the loan, often by much more than the payment suggests. The FCA counts credit and other contractual commitments that continue after the mortgage starts as committed expenditure, with loans, credit cards, hire purchase and child maintenance among its examples. A lender must take reasonable steps to find the actual figures, for example with a [credit reference agency](https://mortgagelane.com/definitions#def-credit-reference-agency) search or your statements ([FCA Handbook: MCOB 11.6.10R to 11.6.13G](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). Each payment comes off the income the mortgage is tested against. Our calculators take outgoings off income before applying the multiple, and on that arithmetic every £1 a month of payments removes £60 of borrowing at 5 times income, so £350 a month of car finance takes £21,000 off the maximum loan. The FCA's guidance lets a lender take a common sense view of a commitment due to end shortly after completion, and lenders decide case by case where that line falls. Repaying debts out of the mortgage itself is [debt consolidation](https://mortgagelane.com/definitions#def-debt-consolidation), which lenders assess differently; our [debt consolidation mortgages](https://mortgagelane.com/mortgages/debt-consolidation-mortgages) page covers it.

**Get in touch** with every monthly payment and the balance left on each agreement.

### Childcare and dependants

Lenders take childcare costs into account, and each dependant increases the household spending the lender assumes. The FCA lists childcare among the basic quality-of-living costs a lender must allow for: costs that can be reduced only with difficulty. For household costs in general, a lender can use your actual spending or statistical data for a household of your make-up, including dependent children, provided its assumptions are realistic ([FCA Handbook: MCOB 11.6.12R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). Some lenders take declared childcare off on top of their household figures and others treat it as part of them, and the worked example below measures the difference. A cost that will soon end, such as nursery fees before a child starts school, may also be treated differently by some lenders.

**Get in touch** with your childcare costs and when they will change.

### Student loans and pension contributions

Deductions from your payslip reduce the net income in the lender's model. A student loan is repaid through payroll at 9% of pay above the threshold for the borrower's plan, or 6% of pay above £21,000 for a Postgraduate Loan ([GOV.UK: repaying your student loan](https://www.gov.uk/repaying-your-student-loan/what-you-pay)). The monthly deduction affects affordability, while the outstanding balance is not usually treated as a debt in the way a personal loan is. Workplace pension contributions also come out of pay before it reaches the bank. Neither is income tax or National Insurance, so each lender sets its own approach to them. Our page on [mortgages for teachers](https://mortgagelane.com/mortgages/mortgages-for-teachers) works through the student loan deduction plan by plan.

**Get in touch** with your payslips.

### Variable income

Variable income such as overtime, bonus and commission may be counted only in part, and self-employed income may be averaged. The FCA requires each lender to set out in its responsible lending policy which types of income it accepts, what proportion of each income stream it counts, how it treats income that varies over time, and what evidence it needs and over what period ([FCA Handbook: MCOB 11.6.20R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). Its guidance gives payslips over a period of time, or regular payments into a bank account, as examples of evidence for overtime. On the same payslips, one lender may count all regular overtime and another only half of it. For self-employed income, lenders use net profit, a share of partnership profit, or salary and [dividends](https://mortgagelane.com/definitions#def-dividend-income), and some take an average over two years. Our [self-employed mortgages](https://mortgagelane.com/mortgages/self-employed-mortgages) page compares the methods, and our pages on [limited company director mortgages](https://mortgagelane.com/mortgages/limited-company-director-mortgages) and [one year self-employed mortgages](https://mortgagelane.com/mortgages/one-year-self-employed-mortgages) cover directors and newer businesses.

**Get in touch** with two years' payslips, P60s or tax calculations.

### Age and term

Older borrowers may be limited to shorter terms, which raises the monthly payment the lender tests, and some lenders lend into retirement on pension income. Where the term would run past the date you expect to retire, or your State Pension age if that is not known, the FCA expects the lender to take a prudent approach to your income after that date, asking for firmer evidence of pension income the closer you are to retiring ([FCA Handbook: MCOB 11.6.15G](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). State Pension age is rising from 66 to 67 between 2026 and 2028 ([GOV.UK: State Pension age timetable](https://www.gov.uk/government/publications/state-pension-age-timetable/state-pension-age-timetable)). In our experience terms run to 40 years, and some lenders have no upper age limit while others cap it at 85. A lender's age limit can therefore decide the case before its income multiple does.

**Get in touch** with your retirement plans and any pension statements.

Car finance of £350 a month costs £21,000 of borrowing at 5 times income on the arithmetic Mortgage Lane's calculators use, because each £1 of monthly payments removes £60 from the maximum loan.

## How do lenders calculate mortgage affordability?

**Mortgage affordability is calculated in six steps, and the lender's own rules decide the figure at each one.** The FCA sets the minimum: income net of tax, committed expenditure, household costs and likely rate rises. Each lender writes the rest into its own policy.

1. **Income counted.** The lender applies its policy to each type of income: basic pay, overtime, bonus, commission, self-employed profit, benefits, rental income and maintenance.
2. **Net monthly income.** Income after income tax and National Insurance, with student loan and pension deductions as the lender's policy treats them.
3. **Committed expenditure.** Credit payments and other contractual commitments that continue after completion, such as car finance, loans, card balances and maintenance. Some lenders take childcare off at this step.
4. **Household expenditure.** The lender's assumptions for a household of your size and make-up, or the figures you declare, where the lender uses them.
5. **Stressed payment.** The [capital and interest](https://mortgagelane.com/definitions#def-repayment-mortgage) payment on the loan over the term, at the lender's stress rate.
6. **Result.** The maximum loan at which the income left covers the stressed payment and the costs, capped by the lender's income multiple.

That is how mortgage affordability is calculated in principle, and the figures used at each step vary from lender to lender. A case can fail the payment test while still sitting inside the lender's income multiple, which is why a loan below 5 times income can be declined. The calculator on this page uses a simpler public method: it takes credit commitments and other outgoings off gross income and applies the multiple, without a lender's household cost model. It shows the direction and size of each change and does not reproduce any lender's answer.

## Why different lenders give different answers

**Two lenders can produce maximum loans tens of thousands of pounds apart for the same applicant, because each sets its own income rules, cost assumptions, stress rate and income multiple cap.** A lender that counts all regular overtime, uses lower household cost assumptions for single applicants, or tests five-year fixes at the pay rate can approve a case another declines.

The FCA requires each lender to write its own responsible lending policy, covering the types of income it accepts and the share of each it counts, the evidence and the period it needs, how it takes committed expenditure and household costs into account, how future interest rates enter the test and the calculation it uses to decide the loan (MCOB 11.6.20R). So two lenders can both follow the rules in full and still reach different answers on the same figures. Household costs show how: a lender using statistical data must make realistic assumptions, but it chooses the data and how the figure scales for each adult and child.

The gaps are widest where income or outgoings are less standard: overtime and bonus, self-employed or director income, more than one job, childcare for more than one child, or a term that runs into retirement. A buyer on one income feels the household cost assumption more than a couple does, as our page on [single person mortgages](https://mortgagelane.com/mortgages/single-person-mortgages) explains. Our page on a [mortgage for a £50k salary](https://mortgagelane.com/insights/mortgage-for-50k-salary) works through the multiples at the income used in the worked example below.

## What changes the result after a failed affordability check

**After a failed affordability check, seven changes can move the answer, and the right one depends on which part of the assessment failed.**

- Clear or reduce a commitment before applying. The effect on the loan is often larger than the balance cleared, because at 5 times income each £1 a month removed adds £60 of borrowing.
- Lengthen the term, where age allows. A longer term lowers the payment the lender tests, at the cost of more interest over the life of the loan.
- Choose a fixed rate of five years or more, where the lender tests it at a lower rate.
- Add an applicant: a [joint mortgage](https://mortgagelane.com/definitions#def-joint-mortgage) with a partner, or a [joint borrower sole proprietor](https://mortgagelane.com/definitions#def-joint-borrower-sole-proprietor) arrangement, where a family member's income supports the loan without them owning the home, as our [JBSP mortgages](https://mortgagelane.com/mortgages/jbsp-mortgages) page explains.
- Evidence variable income for the full period a lender needs.
- Choose a lender whose model fits your income and household.
- Borrow less, with a larger deposit or a cheaper property.

Clearing debt from savings is a trade-off: the same money could go towards the deposit, and a smaller deposit can mean a higher loan to value and a different choice of lenders. Mortgage Lane does not give debt advice. MoneyHelper and other free services can help with debts ([GOV.UK: options for dealing with your debts](https://www.gov.uk/options-for-paying-off-your-debts)). Our [family help mortgages](https://mortgagelane.com/mortgages/family-help-mortgages) page sets out the options where family can help, and our [first-time buyer mortgage guide](https://mortgagelane.com/guides/first-time-buyer-mortgage-guide) covers the schemes for first-time buyers. Reapplying unchanged to a lender with a similar model is likely to end the same way. Each full application also leaves a search on your credit file, as our page on a [mortgage declined after application](https://mortgagelane.com/mortgages/mortgage-declined-after-application) explains.

## How a mortgage after an affordability decline is arranged

1. **Full income and outgoings picture.** Payslips, P60s or tax calculations, bank statements, every credit commitment, childcare and other regular costs, and the reason the lender gave for the decline, where it gave one.
2. **Modelling across lenders.** We run the figures against each candidate lender's income rules, household cost assumptions, stress rate and multiple, and measure the gap before anything is submitted.
3. **Changes identified.** Which commitments to clear or reduce, the term, the product length and whether another applicant would help, with the effect of each on the loan.
4. **Decision in principle.** An [agreement in principle](https://mortgagelane.com/definitions#def-agreement-in-principle) from the lender whose model fits, on a [soft search](https://mortgagelane.com/definitions#def-credit-search) where the lender offers one.
5. **Application.** The full application to that lender with the evidence its policy asks for, followed by its underwriting, the [lender's valuation](https://mortgagelane.com/definitions#def-mortgage-valuation) and the [mortgage offer](https://mortgagelane.com/definitions#def-mortgage-offer).

## One applicant, three answers: the affordability arithmetic

**An illustrative single applicant earning £50,000, with £350 a month of car finance and £800 a month of childcare, asks for £220,000.** The same income gives three different maximum loans depending on how the outgoings are read, and clearing one commitment raises every reading that takes it off.

### Step 1. The applicant

An illustrative case, not a product or an offer. The applicant is buying alone, has no credit card balances and has £8,000 left to pay on the car finance. The loan asked for is 4.4 times income, below the 4.5 times line that counts towards the Bank of England's limit, so the flow limit does not affect this case. The multiple is 5 times, the standard in Mortgage Lane's experience.

## Step 1 figures

*Step 1 figures*

| Item | Figure |
| --- | --- |
| Gross annual income | £50,000 |
| Car finance | £350 a month, £4,200 a year |
| Left to pay on the car finance | £8,000 |
| Childcare | £800 a month, £9,600 a year |
| Credit card balances | None |
| Loan asked for | £220,000 |
| Loan to income on the loan asked for | 4.4 times |
| Term and rate | 30 years at 5.2%, illustrative |

Hypothetical figures for illustration. 5.2% is the illustrative rate used across our guides, not a product rate.

### Step 2. Three readings of the same income

Each reading applies 5 times to the income left after the outgoings it takes off. The first takes nothing off, as a pure income multiple does. The second takes the car finance off and leaves childcare to the household costs a lender assumes for a family. The third takes both off in full. None of the three is any lender's model.

## Step 2 figures: three readings of the same income

*Step 2 figures: three readings of the same income*

| Reading | Income after the outgoings taken off | Maximum loan at 5 times | Against the £220,000 asked for |
| --- | --- | --- | --- |
| Multiple alone, nothing taken off | £50,000 | £250,000 | £30,000 to spare |
| Car finance taken off, childcare left to the lender's household cost assumptions | £45,800 | £229,000 | £9,000 to spare |
| Car finance and childcare both taken off | £36,200 | £181,000 | £39,000 short |

Illustrative arithmetic on hypothetical figures, worked with the calculator on this page. 5 times is the standard multiple in Mortgage Lane's experience, not a lender term, and the readings are not any lender's model. Not an offer of finance.

The first two readings cover the £220,000 and the third falls £39,000 short. A lender whose model works like the third reading would decline the case on affordability, even though £220,000 is below both 4.5 and 5 times income. At 4.5 times, the multiple alone would give £225,000.

### Step 3. Clearing the car finance

Suppose the applicant clears the £8,000 left on the car finance before applying.

## Step 3 figures: clearing the car finance

*Step 3 figures: clearing the car finance*

| Reading | Maximum loan before | Maximum loan after the car finance is cleared | Change |
| --- | --- | --- | --- |
| Car finance taken off, childcare in household costs | £229,000 | £250,000 | £21,000 more |
| Car finance and childcare both taken off | £181,000 | £202,000 | £21,000 more |

Illustrative arithmetic on hypothetical figures at 5 times, worked with the calculator on this page. Not debt advice and not an offer of finance.

Clearing £8,000 adds £21,000 to the maximum loan on both readings, more than two and a half times the balance repaid, because the £350 a month no longer comes off income before the multiple: £4,200 a year at 5 times. On the third reading the case is still £18,000 short. A larger deposit, a second income on the application or a lender that applies a higher multiple would close it. In our experience up to 6 times is available for professionals and specialist products, which on £40,400 of income after childcare gives £242,400. If the £8,000 comes out of the deposit, the loan needed on the same home rises to £228,000. The second reading still covers that with £22,000 to spare. The third misses it by £26,000, and at 4.56 times income the larger loan would also count towards the Bank of England's limit.

### Step 4. The term and the stressed payment

The multiple does not depend on the term, but the payment a lender tests does. The table shows the monthly payment on £220,000 at the illustrative 5.2% rate and at 6.2%, the same rate with the 1% minimum rise the FCA's rule requires a lender to assume over five years. A lender's own stress rate can be higher.

## Step 4 figures: monthly payment on £220,000

*Step 4 figures: monthly payment on £220,000*

| Term | At 5.2%, illustrative | At 6.2%, with the 1% minimum rise added |
| --- | --- | --- |
| 25 years | £1,311.86 | £1,444.48 |
| 30 years | £1,208.04 | £1,347.43 |
| 35 years | £1,138.53 | £1,284.10 |

Capital and interest payments worked with the calculator on this page. 5.2% is an illustrative rate, not a product rate, and 6.2% adds the 1% minimum rise in FCA rule MCOB 11.6.18R; a lender's own stress rate can be higher. Not an offer of finance.

Moving from 25 to 35 years lowers the payment tested at 6.2% by £160.38 a month, at the cost of more interest over the life of the loan. A rate fixed for five years or more is outside the five-year test, so a lender can assess it in the 5.2% column. Neither change alters the multiple, so they help where the case failed the lender's payment test and not its income cap.

### What decides the case

Model the loan across lenders before applying, clear or reduce the commitments that weigh most, and choose the lender, product length and term that fit your income. On this example the treatment of childcare decides more than any other figure: £48,000 of borrowing separates the second and third readings, more than twice the effect of clearing the car finance. Finding out which reading a lender applies, before the application goes in, shows whether the case is worth making again and with whom.

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## More topics in this series

## Mortgage affordability calculator

The calculator shows the most a lender might lend at the income multiple you enter, with and without childcare and other regular costs taken off, what clearing your credit payments would add, and the monthly payment on the loan you asked for at the illustrative rate and at a tested rate. The starting figures are the illustration on this page: £50,000 of income, £350 a month of car finance, £800 a month of childcare and a £220,000 loan. Enter your own income, commitments and outgoings, and 0 as the rate rise for a rate fixed for five years or more.

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Indicative estimate only, subject to lender criteria, affordability and valuation. Lenders set their own income rules, household cost assumptions, stress rates and income multiples, so the figures you enter are assumptions. This is not a mortgage offer. Your home may be repossessed if you do not keep up repayments on your mortgage.

## Frequently asked questions about a mortgage declined on affordability

**Q: What does it mean if a mortgage is declined on affordability?**

faq-id: what-does-it-mean-if-a-mortgage-is-declined-on-affordability

A mortgage declined on affordability means the lender's assessment concluded that your income, after credit commitments and household costs, would not support the loan you asked for at the interest rate it tested. The FCA's rules require a lender to take account of income net of tax, committed expenditure, basic household costs and likely future rate rises, and each lender builds its own model within them ([FCA Handbook: MCOB 11.6](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). The decline is that lender's answer on that model, so another lender may reach a different one on the same figures.

**Q: Does a mortgage declined on affordability mean no lender will lend?**

faq-id: does-a-mortgage-declined-on-affordability-mean-no-lender-will-lend

No. A mortgage declined on affordability is one lender's answer, and other lenders count income, assume household costs, set stress rates and cap income multiples differently, so the same case can pass elsewhere. Before reapplying, it helps to find out which part of the assessment failed and to model the loan with lenders whose rules suit your income. A second full application to a similar lender is likely to end the same way, and it leaves another search on your credit file. Where no lender's model reaches the full amount, a smaller loan, a longer term or another applicant can close the gap.

**Q: How do banks calculate mortgage affordability?**

faq-id: how-do-banks-calculate-mortgage-affordability

Banks and other lenders calculate mortgage affordability by taking your income net of income tax and National Insurance, deducting credit commitments, childcare and their figure for household costs, and testing whether what remains covers the mortgage payment at a stressed interest rate. The FCA's rules set those minimum steps, and each lender writes its own policy on which income counts, how costs are measured and which rate it tests ([FCA Handbook: MCOB 11.6](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). The result is then capped by the lender's income multiple, which in our experience is 5 times income after credit commitments as standard and up to 6 times for professionals and specialist products.

**Q: How can I increase my mortgage affordability?**

faq-id: how-can-i-increase-my-mortgage-affordability

You can increase your mortgage affordability by clearing or reducing credit commitments, or by lengthening the term where your age allows. A fixed rate of five years or more can help where the lender tests it at a lower rate, and so can adding an applicant, evidencing variable income for the full period a lender asks for, or applying to a lender whose model suits your income. Borrowing less, through a larger deposit or a cheaper home, also closes a gap. Each change works differently from lender to lender, so modelling them before applying shows which ones matter for your case.

**Q: Why do different lenders offer different amounts?**

faq-id: why-do-different-lenders-offer-different-amounts

Different lenders offer different amounts because each sets its own rules on which income it counts, the household costs it assumes, how it treats commitments, the stress rate it tests at and its income multiple cap. The FCA requires every lender to write those choices into its own responsible lending policy, so the models differ by design. The same applicant can see maximum loans tens of thousands of pounds apart. A lender that counts all regular overtime, or tests a five-year fix at its pay rate, can approve a loan another lender declines.

**Q: Should I pay off debts before applying for a mortgage?**

faq-id: should-i-pay-off-debts-before-applying-for-a-mortgage

Paying off debts before applying usually increases how much you can borrow, because lenders take monthly commitments off the income available for the mortgage. Using savings to clear a debt also reduces your deposit, so you need to weigh the effect of fewer commitments against a smaller deposit, which can change the loan to value, the rate and the choice of lenders. Mortgage Lane does not give debt advice. MoneyHelper and other free services can help with debts ([GOV.UK: options for dealing with your debts](https://www.gov.uk/options-for-paying-off-your-debts)).

**Q: What is a mortgage stress test?**

faq-id: what-is-a-mortgage-stress-test

A mortgage stress test checks whether you could still afford the payments if interest rates rose. Under the FCA's rules a lender must consider likely interest rates over at least the first five years and assume a rise of at least 1%, unless the rate is fixed for five years or more ([FCA Handbook: MCOB 11.6.18R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). The rules do not say which rate the test must start from, so each lender sets its own stress rate, and a longer fix may be tested at or close to the pay rate. The Bank of England's separate affordability test was withdrawn on 1 August 2022.

**Q: Can car finance reduce how much I can borrow?**

faq-id: can-car-finance-reduce-how-much-i-can-borrow

Yes. Lenders take the car finance payment off the income available for the mortgage, and the effect on the maximum loan is often far larger than the balance left to pay. On the arithmetic our calculators use, every £1 a month of payments removes £60 of borrowing at 5 times income, so £350 a month reduces the maximum loan by £21,000. On those figures, clearing a balance of £8,000 would add more borrowing than it cost. Some lenders may treat an agreement with only a few payments left differently, as the FCA's guidance allows.

**Q: Does my credit card balance affect affordability?**

faq-id: does-my-credit-card-balance-affect-affordability

Your credit card balance can affect affordability even if you clear it every month. Lenders count credit cards as a commitment. Some take a percentage of the balance as a monthly cost, and others count a balance only if it is not repaid in full. Our calculators count 3% of card balances a month, so a £2,000 balance takes £720 a year off income and reduces the maximum loan by £3,600 at 5 times income. Reducing balances before applying can increase the maximum loan.

**Q: Does childcare affect mortgage affordability?**

faq-id: does-childcare-affect-mortgage-affordability

Childcare costs reduce the maximum loan, because lenders take them into account as an outgoing, and each dependant increases the household spending a lender assumes. The FCA lists childcare among the basic quality-of-living costs a lender must allow for, and a lender can use your actual costs or statistical figures for a household of your make-up ([FCA Handbook: MCOB 11.6](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). Some lenders may treat costs that will soon end differently, such as nursery fees before a child starts school, so it helps to show when the cost will fall.

**Q: Does a longer mortgage term improve affordability?**

faq-id: does-a-longer-mortgage-term-improve-affordability

A longer mortgage term lowers the monthly payment and so improves affordability in a lender's payment test, but it increases the total interest paid. On an illustrative £220,000 loan at 5.2%, the payment is £1,311.86 a month over 25 years and £1,138.53 over 35 years. Lenders limit terms by age. Where the term runs past your expected retirement date, or State Pension age if that is not known, the FCA expects the lender to assess your income in retirement. In our experience terms run to 40 years, and some lenders have no upper age limit while others cap it at 85.

**Q: Why do five-year fixed mortgages let me borrow more?**

faq-id: why-do-five-year-fixed-mortgages-let-me-borrow-more

Five-year fixed mortgages can let you borrow more because the Financial Conduct Authority's MCOB rules require lenders to allow for likely rate rises over at least five years, unless the rate is fixed for five years or more ([FCA Handbook: MCOB 11.6.18R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). Some lenders therefore test a five-year fix at, or close to, the pay rate, while a shorter fix is tested at a higher stressed rate, so the same income can support a larger loan. Whether a five-year fix helps depends on the lender and on whether a longer fix suits your plans.

**Q: Is affordability the same as an income multiple?**

faq-id: is-affordability-the-same-as-an-income-multiple

No. An income multiple caps the loan at a multiple of income. Affordability tests whether your income, after commitments and household costs, covers the payment at a stressed rate. A lender applies both, and the lower answer sets the loan. The FCA allows a lender to limit lending to a multiple of income only if it can still show the loan is affordable. So a loan within the multiple can still fail affordability, for example where car finance or childcare takes a large share of income.

**Q: Is there a limit on lending at 4.5 times income?**

faq-id: is-there-a-limit-on-lending-at-4-5-times-income

Yes, but it applies across the market rather than to each borrower. Under a Bank of England recommendation, no more than 15% of new residential mortgages should be made at 4.5 times income or more, so most new mortgages are below that level. Since July 2025 individual lenders have been able to go above 15% under interim measures running to 31 December 2026 at the latest, and the PRA and FCA consulted in April 2026 on making that permanent. As at October 2026 the final rules had not been published ([Bank of England: high loan to income lending](https://www.bankofengland.co.uk/prudential-regulation/publication/2026/april/high-loan-to-income-lending-consultation-paper)). Some lenders keep loans at that level for higher earners or particular professions.

**Q: Can a joint application help with affordability?**

faq-id: can-a-joint-application-help-with-affordability

Adding a joint applicant combines incomes and can increase the maximum loan, though the second applicant's commitments are counted too. A joint borrower sole proprietor mortgage lets a family member's income support the loan without them owning the property, and in our experience up to four borrowers can be named on one. Everyone named on the mortgage is responsible for the whole debt, so each borrower needs to be comfortable with the full payment.

**Q: Does overtime count for mortgage affordability?**

faq-id: does-overtime-count-for-mortgage-affordability

Overtime can count for mortgage affordability, but how much varies by lender: it may be counted in full, in part or as an average over one or two years. The FCA's guidance gives payslips over a period of time, or regular payments into a bank account, as examples of evidence for overtime. Two years of payslips, or P60 end-of-year certificates showing regular overtime, help a lender count more of it. A P60 shows your pay and the tax paid on it for a tax year running from 6 April to 5 April ([GOV.UK: P60](https://www.gov.uk/paye-forms-p45-p60-p11d/p60)).

**Q: Does a student loan affect getting a mortgage?**

faq-id: does-a-student-loan-affect-getting-a-mortgage

A student loan affects getting a mortgage through the monthly repayment on the payslip. Student Loans Company loans do not appear on credit reports, so the balance does not affect a lender's view of credit history. The repayment is taken through payroll as 9% of pay above the plan's threshold, or 6% for a Postgraduate Loan, and lenders take it into account in affordability, although they differ on how. The effect grows with pay above the threshold: a Plan 2 borrower on £40,000 repays £79 a month in 2026/27, which at 5 times income reduces the maximum loan by £4,740 if a lender counts it as a commitment.

**Q: Do lenders use my declared spending or their own figures?**

faq-id: do-lenders-use-my-declared-spending-or-their-own-figures

Lenders can use either your declared household spending or their own statistical figures, and a lender that holds both may take the higher, so declaring very low spending does not by itself increase the loan. The FCA's rules let a lender use statistical data for a household of your size and make-up, with realistic assumptions ([FCA Handbook: MCOB 11.6.12R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). Credit commitments are different: the lender must take reasonable steps to find your actual commitments, usually from your declaration, statements and a credit search. For childcare and maintenance, lenders use what you declare and evidence.

**Q: Can I appeal an affordability decline?**

faq-id: can-i-appeal-an-affordability-decline

Some lenders will reconsider an affordability decline if new information changes the assessment, such as evidence of income that was not counted or a commitment that has since been cleared, but a lender does not have to change its decision. Asking which part of the assessment failed shows whether a fresh case to the same lender is worth making. Applying to a lender whose model fits your income is often quicker, and modelling the case first helps avoid a second decline.

**Q: Will borrowing less get me approved?**

faq-id: will-borrowing-less-get-me-approved

Borrowing less can turn an affordability decline into an acceptance, because a smaller loan lowers the payment the lender tests, but the lender still decides on its full assessment. A larger deposit and a cheaper property are the usual ways to borrow less. For example, if £181,000 is the most a lender's assessment supports and you asked for £220,000, £39,000 more deposit or a home costing £39,000 less would close the gap. Checking your maximum loan with the lenders that suit your income before you choose a property helps avoid a shortfall like this.

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Published: 2026-10-08

Last reviewed: 2026-10-12

Source: https://mortgagelane.com/mortgages/mortgage-declined-on-affordability