The mortgage stress test qualifies borrowers at the higher of: contract rate + 2% or 5.25%. This ensures you can handle rate increases.
TDS (Total Debt Service) ratio must stay ≤44% of gross income to pass.
A $400K mortgage on $90K income at 4.8% → stress rate = 6.8%.
Use this calculator before making any financial commitment that depends on this type of calculation. Running the numbers in advance lets you evaluate options without the pressure of a live negotiation or decision deadline.
A frequent error is using annual rates where monthly rates are required (or vice versa). Simply dividing an annual rate by 12 is only an approximation — the correct conversion for compound calculations uses the (1 + r)^(1/12) − 1 formula.
A first-time buyer models three scenarios before making an offer: 10%, 15%, and 20% deposit on a £280,000 property. The calculator shows exactly how the monthly payment and total interest cost change with each deposit level, making the decision visible rather than speculative.
A regulatory test requiring you to qualify at your contract rate + 2% (or 5.25% minimum), ensuring you can afford repayments if rates rise.
Total Debt Service ratio must be 44% or below. TDS = (All monthly debts × 12) ÷ Annual gross income × 100.
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