What Affects Your Mortgage Capacity Report?

When we started producing Mortgage Capacity Reports for the courts, we quickly understood the pressure to get it right. Many of our clients are going through separation, and for some this is the first time they've had to think about their finances independently. A clear, accurate report isn't just a formality — it's often the thing that gives people direction at a genuinely difficult time.

After 25 years in mortgages, the fundamentals haven't changed even as the market has: income minus debt equals affordability. Simple in principle, but several factors shape the number:

• Term — a longer term generally means lower monthly payments, and therefore more capacity
• Debts — hire purchase, credit cards (usually assessed at 3% of the balance as a monthly liability), personal loans and similar
• Interest-only — some lenders assess affordability on the interest-only payment rather than the full repayment term
• Dependants — more dependants means a higher assessed monthly liability
• School fees
• Mortgage product — certain products, like a 5-year fixed rate, can improve borrowing with some lenders
• Maintenance — whether received or paid, now or anticipated in future
• A second job, pay rise, or promotion — can all be used to support income
• Rental income — typically not used by lenders in this type of assessment

The grey area

Sometimes a client's stated outgoings appear to match their income exactly, showing no capacity at all. In these cases, we look closely at what's actually essential. Spending on things like pet grooming, or a carpet or oven cleaning service, isn't something lenders treat as a committed cost — and neither do we. That's not always a popular conversation, but it's an important one: we explain our reasoning clearly, and we stand behind the figure in the report we produce.

Additional scenarios

If there's a dispute about assets or maintenance payments, we're happy to prepare one additional scenario as part of the standard fee, incorporating this into our assessment.