Affordability guide
How lenders estimate your expenditure
Written and reviewed by Sophie Harrison · Page last reviewed 8 May 2026
A plain-English tour of the figure every mortgage lender quietly assumes about your life — what's in it, what's out, and why it shifts as your salary, family and postcode change.
Why lenders estimate it at all
Affordability rules require lenders to check you can genuinely live on what's left over after the mortgage is paid. They don't just trust the figure you write on the form — partly because applicants tend to under-state, partly because the regulator insists. So they build a picture of your "minimum viable life" using national survey data, your declared spending, and (often) a peek at your bank statements.
What's in the basket
"Essentials" is a deliberately narrow definition: the things you can't stop paying for if you still want a roof, a working fridge and a way to get to work. Holidays, gym memberships, takeaways and savings sit outside this number.
A typical "essentials" basket
Roughly how a £35k household's essentials break down. Yours will differ.
Counted as essential
- Food & drinks at home
- Energy, gas, water
- Public transport, fuel, basic motoring
- Council tax
- Home, contents and motor insurance
- Modest clothing
- A baseline allocation for recreation
Not counted here
- Your mortgage payment (modelled separately)
- Rent (assumed gone after completion)
- Childcare (entered as its own field)
- Pension contributions — usually netted off your income before the affordability model runs (the same way tax and National Insurance are). Most lenders accept this; some count part of it back in for very large contributions, depending on your role and circumstances.
- Student loan repayments — also taken off your income before the model runs, like tax and NI, using HMRC plan rates.
- Holidays and lifestyle upgrades
- Savings into investments
How lenders actually do it
The recipe is broadly the same across the high street, even if the seasoning differs:
Statistical model
Almost every UK lender starts from a national survey (ONS Family Spending) that estimates what a household with your income, location and family size typically needs to live on.
What you tell them
You declare your monthly outgoings. The lender adds known commitments — credit cards, loans, childcare, maintenance — that the survey excludes.
Bank statements & open banking
Many lenders cross-check against your bank statements or open-banking feed. They look for hidden subscriptions, gambling, undisclosed debts, regular transfers.
They take the higher figure
If your declared figure is lower than the model expects, lenders generally use the higher of the two. Honesty rarely costs you and dishonesty can void an offer.
Specialist lenders sometimes weight bank-statement evidence more heavily; high-street lenders tend to lean on their own statistical model first.
Why richer households spend more — but proportionally less
There's only so much food one person can eat, only so much council tax to pay. So as income climbs, essential spend climbs too — but much more slowly. Earn three times more and you don't need three times more food. This is why lenders use a curve, not a flat percentage.
As income rises, essentials shrink as a share — but the cash amount creeps up
Hover or tap a bar to see the figures.
Source: ONS Living Costs & Food Survey, financial year ending 2024. Excludes housing, childcare, pensions and student loans.
On a £100k income the same essentials only swallow ~17% of gross. The rest is potentially available for a mortgage payment, savings, or the lifestyle the lender doesn't see.
Region and family size
Two households on identical salaries can need very different baseline budgets. Most lender models apply small multipliers for region and dependants. The numbers below are a typical shape — every lender tweaks their own version.
Where you live
Council tax, transport and food prices vary across the UK. A typical adjustment looks like:
Who's at home
Each child adds to the bill — older kids cost more.
Worked example: a couple with one 8-year-old and one 15-year-old uses 1.00 + 0.25 + 0.30 = 1.55× the baseline figure.
How we estimate it
When you start filling in the affordability calculator, we pre-populate "Essential expenditure" with our own estimate. Three things drive it:
- 1Your gross income. Drives the curve — higher earners get a higher cash figure but a smaller percentage of income.
- 2Your region. London and the South East get a small uplift; the North, Wales and Northern Ireland get a small reduction.
- 3Dependants. Each child under 14 adds 25%; each teenager 14–18 adds 30%.
The figure we land on is based on ONS Family Spending data (financial year 2024) and is deliberately set on the cautious side — about 85% of the central national figure. The reason: many households spend less than the average (working from home, sharing bills, lower-cost diets), so starting low keeps your borrowing estimate realistic. You can always nudge it up if your real spending is higher.
A few tips for your application
Be honest, especially about subscriptions
Open banking will surface every recurring direct debit. If your declared figure is wildly lower than the lender sees on your statements, expect questions or a decline.
Bunch up admin before applying
Lenders look at the most recent two or three months of statements. Pay off a credit card, cancel that gym you stopped using, and let the dust settle for a statement cycle before you apply.
Childcare goes in its own box
Most calculators (including ours) treat childcare separately. Putting it in your essential figure as well can double-count it.
Don't try to game the figure
If you under-state and the lender's model spits out a higher number, the higher number wins. The exercise is mostly about making the lender comfortable, not winning a negotiation.
Ready to see your numbers?
Tweak the figure on the affordability calculator and watch your max loan move in real time.
Sources: ONS Family Spending in the UK FYE 2024; Sherif (2024) on essential vs discretionary consumption; Valuation Office Agency council tax band data. Figures are illustrative — every lender applies its own model.