Debt calculator

This easy-to-use debt calculator lets you work out your debt to income ratio. This ratio shows you what percentage of your monthly income is used to repay debt.

Banks and lenders often use this as a way to gauge your financial health and, whilst every lender has their own specific approach, as a general rule if your debt to income ratio is below 40%, it means you are in a fairly healthy situation. A higher ratio means that you may struggle if you attempt to take on extra debt.

You can use this tool to work out your current situation by simply entering all of your income and all of your current debt repayments into the debt calculator and it will automatically calculate your debt to income ratio. Knowing where you stand before applying for more credit gives you a better idea about whether you can afford a new loan or not.

Here's how to use it.

If you want to just jump right in, click here to calculate your debt

1. Under monthly income enter how much you earn after tax and any other payments you receive, for example child support.
2. Under monthly costs enter how much you have to repay on your debts. Follow each step in the calculator by entering your monthly repayments for all your existing debts, for example, credit cards, car loans, personal loans, student loans, payments to spouses, other monthly repayments, existing mortgage repayments and any home equity loan repayments.
3. Once you have entered all your debt repayments, simply press "calculate" and your debt to income ratio is displayed on the screen.

Although having a debt to income ratio higher than 40% does not necessarily preclude you from borrowing more, the decision will always rest with your lender. If you have a very high income some lenders may still approve more credit. In most normal circumstances, a high ratio automatically rings alarm bells and you should carefully reassess your own circumstances to determine whether you can really afford the extra repayments a new loan would require.

Lenders consider a high debt to income ratio to be greater than 40%. They may not lend you more money unless you reduce your existing debts because you might be at risk of not keeping up your repayments.

Debt to income ratio calculator

It might be possible to adjust your budget and cut back on some expenses in order to afford a new loan, but remember, it's a good idea to keep as much flexibility as possible in your budget to cater for unexpected emergencies.

If you know that your circumstances will be changing in the near future, you can use the calculator to simulate the changes by amending the income or repayments that will apply. This will help you gauge the changes and how they may impact upon your debt to income ratio.

Remember, this debt calculator is for illustrative purposes only. There are other factors that may affect your ability to pay off your debts or get credit.