Borrowing Power Calculator
Estimate how much you could potentially borrow for general-purpose credit, based on two illustrative tests: a debt-to-income ceiling and your disposable income after living costs — both adjustable assumptions, not fixed rules. The lower of the two sets your limit.
Full Breakdown
Sensitivity: DTI Ceiling
How your estimated maximum borrowing shifts at different DTI ceilings, keeping everything else the same. The disposable income test may still cap the result.
Sensitivity: Loan Term
How your estimated maximum borrowing shifts with a longer or shorter loan term, at your chosen interest rate and binding repayment.
Sensitivity: Annual Interest Rate
How your estimated maximum borrowing shifts with a different interest rate, at your chosen loan term and binding repayment.
Borrowing Power Calculator
Our Borrowing Power Calculator estimates how much you could potentially borrow for general-purpose credit — a personal loan, debt consolidation, or any unsecured borrowing not tied to a specific purchase. Unlike calculators built around one product (a mortgage or a car), this one runs two independent, illustrative affordability tests and uses whichever is more conservative. It is loosely inspired by the kinds of checks lenders consider, but it does not model an actual lender’s assessment process.
The Two-Constraint Approach
This calculator applies two separate tests, then takes the lower result:
- DTI ceiling test: caps your total monthly debt (existing plus new) at a chosen percentage of your net income. This reflects how lenders often look at overall debt burden relative to income.
- Disposable income test: works out what’s genuinely left over after essential living costs and existing debt, then applies a buffer percentage to that. This reflects real day-to-day affordability, independent of any income-based ceiling.
In practice, one of these two tests will usually be more restrictive than the other — this calculator identifies which one is binding for your situation and explains why.
How to Use This Calculator
- Enter your monthly net income – your take-home pay after tax.
- Enter your existing monthly debt repayments – loans, credit cards, other finance — used in both tests.
- Enter your essential monthly living costs – rent or mortgage, bills, food, and other non-discretionary spending. This is only used in the disposable income test.
- Set your max DTI ceiling – the default is 40% of income for total debt, adjustable to suit your own risk tolerance.
- Set your disposable income buffer – the default is 50%, meaning half of what’s left after living costs and existing debt could go toward new borrowing.
- Choose a loan term and annual interest rate to convert your binding monthly repayment into an estimated maximum borrowing figure.
- Click Calculate to see which test is binding and your resulting borrowing capacity.
Why Two Tests Instead of One?
A DTI-only approach can overstate what’s affordable for someone with high essential living costs relative to their income (a high earner in an expensive area, for example). A disposable-income-only approach can understate what’s affordable for someone with very low living costs and low existing debt, since it ignores income-based ceilings entirely. Using both and taking the more conservative result gives a more grounded estimate than either test alone — and shows you clearly which factor is actually limiting your borrowing capacity.
Worked Example
| Input | Value |
|---|---|
| Monthly net income | £3,000 |
| Existing monthly debt | £300 |
| Essential monthly living costs | £1,200 |
| Max DTI ceiling | 40% |
| Disposable income buffer | 50% |
| Loan term | 60 months |
| Annual interest rate | 8.9% |
| DTI-based max repayment | £900/month |
| Disposable income | £1,500 |
| Disposable-based max repayment | £750/month |
| Binding constraint | Disposable income (£750 is lower than £900) |
| Estimated maximum borrowing | ~£36,500 |
What This Calculator Doesn’t Do
- It isn’t a lending decision. Lenders assess affordability using your full credit history, existing commitments, and their own criteria — this may differ from the two-test estimate here.
- It treats all new borrowing as one loan. If you’re planning several separate borrowing needs, consider them together against the same DTI ceiling and disposable income figures.
- It doesn’t model secured lending specifically. For a mortgage, use our Mortgage Affordability Calculator, which applies income-multiple and stress-testing rules specific to mortgage lending.
Frequently Asked Questions
What is a DTI ceiling?
A debt-to-income (DTI) ceiling is a chosen limit on how much of your income goes toward total debt repayments. This calculator defaults to 40%, but there’s no single official UK standard — different lenders and different guides use different figures, and this is presented as an illustrative planning input rather than a fixed rule.
Why does the calculator use two tests instead of just DTI?
A DTI-only approach can look affordable on paper even when someone has very high essential living costs, since DTI only considers debt against income. The disposable income test captures what’s actually left over day to day. Using both and taking the more conservative result gives a more grounded estimate of genuine borrowing capacity.
What counts as an “essential” living cost?
Essential living costs typically include rent or mortgage payments, utility bills, groceries, council tax, insurance and transport — the costs you’d need to cover regardless of any new borrowing. Discretionary spending (subscriptions, entertainment, dining out) is not usually included, since it could be reduced if needed, though you’re free to include it in your own estimate for a more conservative result.
Does this replace a lender’s affordability check?
No. Lenders assess affordability using your full credit history, existing debts, income verification and their own lending criteria, which can differ from this budget-based estimate. This calculator is a planning tool to help you understand your own budget-based borrowing range before you apply for credit.
What’s the difference between this and the Debt-to-Income Ratio Calculator?
The Debt-to-Income Ratio Calculator tells you your current DTI ratio based on your existing debts. This calculator goes a step further, using DTI as one of two tests to estimate how much additional borrowing you could take on, then converts that into an actual maximum loan amount over a chosen term and rate.
Should I use the DTI ceiling or the disposable income buffer to plan?
Whichever one is lower for your situation is your real-world constraint, and this calculator identifies that automatically. If your disposable income test binds, focusing on reducing essential living costs or existing debt could increase your borrowing capacity more than changing the DTI ceiling would.