How can I calculate my mortgage affordability?

To calculate mortgage affordability, keep in mind that different banks may have slightly different methods, but a general guideline is to use 50% of your monthly income. From this amount, they will subtract any other credit commitments you have, such as car loans, personal loans, and approximately 5% of your credit card limits. This will determine your maximum affordability. Next, a stress test will be conducted using a stress rate of interest, which can range from 3.5% to 8%, depending on the bank. The purpose of this test is to ensure that you will still be able to afford your mortgage repayments in case the interest rates increase to the stress level. To learn more about how much you can afford, use our affordability calculator here.