What is an Affordability Assessment?


What is an Affordability Assessment?

An Affordability Assessment is designed to help the lender assess whether you can afford to make repayments over the term of the loan.

Whether you’re getting a mortgage or taking out a doorstep loan, any responsible lender will look at your incomings and outgoings to find out if you can afford to pay back the money you’ve applied to borrow.

How it works in general

Any regular income you have will be taken into account, including things like your monthly or weekly wage, benefit payments and any extra income such as child maintenance. This is offset against your personal and living expenses, such as utility bills, food bills and other outgoings.

When everything is collected, the lender can calculate whether you’ll be able to keep up with the payment schedule you’re looking to agree to. They can then make a decision to lend you the amount you’ve requested, or let you know you can borrow a lower amount providing this is suitable for the reason for credit.

How Provident’s Affordability Assessment works

Our assessment involves all of the above. The real difference is that with us, the assessment is not done remotely. The Affordability Assessment is carried out by a Provident Agent when they visit your house to talk about your loan. The Agent will need to see things like payslips, evidence of your rent or mortgage payments and if you have things like pension income. But they also meet you and talk to you about your circumstances. We think this makes a huge difference.

Lenders verify the data to credit checks so it’s worthwhile being as accurate as possible on the incomings and outgoings.

For a detailed breakdown of how the whole thing works with us, what you’ll need and to get an idea of how this might affect you, see our FAQ.

What if I fail the Affordability check?

If, after completing an Affordability Assessment, a lender decides you can’t afford to pay back the loan amount requested, there are other options. The lender may be able to offer you a loan of a smaller amount, or a longer repayment schedule, for example.