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Regular commitments in respect of loans, credit cards, hire purchase agreements, mail order, maintenance etc. will be deducted from income as follows:

  • Loans, hire purchase, maintenance – Annual payments made
    (Loans with less than 12 months to run may be disregarded, provided the aggregate monthly payment does not exceed 10% of net monthly income)
  • Credit cards and mail order commitments – 60% of outstanding balance (5% of outstanding balance X 12)
    Where the aggregate total of credit card and mail order balances is less than £1,000 – these may be disregardedWhere credit card balances are repaid in full each month – The amount should be covered by expenditure items rather than be deducted from income
  • Child care costs – will be included in the affordability calculation
  • Negative capital – For self-employed applicants, any negative capital disclosed in the accounts or accountant’s reference will be treated as a commitment
  • On other encumbered properties any shortfall (i.e. where the rental income is less than 145% of the borrowing commitment) will be treated as a commitment