When you apply for a mortgage, one of the first things lenders look at is your financial commitments.
These are the regular outgoings that reduce your disposable income and can affect how much you can borrow. Understanding exactly what counts as a financial commitment can make a big difference when preparing for a mortgage application – whether you’re a first-time buyer, moving home, or remortgaging.
1. Regular Credit Repayments
Any form of ongoing credit is viewed as a financial commitment. This includes:
- Credit cards (even if you pay the balance off each month)
- Personal loans
- Car finance (PCP, HP, lease agreements)
- Store cards
- Buy Now, Pay Later agreements (Klarna, Clearpay, etc.)
Lenders take these seriously because they demonstrate fixed monthly obligations that reduce your available income.
2. Household Bills & Utility Costs
While not classed as “debts,” recurring expenses still show lenders how much you spend to maintain your home and lifestyle. Examples include:
- Gas, electricity, water
- Council tax
- Broadband and TV packages
- Mobile phone contracts
These costs help lenders assess affordability and stability.
3. Subscriptions & Memberships
Monthly payments like gym memberships, streaming services, app subscriptions and insurance policies may seem small individually, but they add up. Lenders view them as evidence of your ongoing lifestyle expenses.
4. Childcare & Family Commitments
Childcare can be one of the largest financial commitments a household has. Lenders will also consider:
- School fees
- Child maintenance payments
- Any financial support you provide to dependents
These costs significantly influence affordability calculations.
5. Overdrafts & Bank Charges
Even if you rarely use your overdraft, the facility still appears on your bank statements. Regular overdraft usage or fees can raise concerns for some lenders.
6. Car Running Costs
Car insurance, fuel, servicing and road tax may not be “credit,” but lenders factor them in because they are predictable, ongoing expenses.
Why Financial Commitments Matter
Your financial commitments help lenders determine your debt-to-income ratio – a key factor in how much you can borrow. The lower your monthly commitments, the more favourable your affordability assessment typically becomes.
How to Prepare Before Applying
If you’re planning a mortgage application within the next 6–12 months, consider:
- Reducing unnecessary subscriptions
- Paying down credit where possible
- Avoiding new finance agreements
- Keeping your bank account in good order
A clearer financial profile can help strengthen your application and open the door to better rates.
If you’re unsure how your commitments may affect your borrowing potential, Your Mortgage Shop is here to help.
We can review your situation and guide you through the best options.
