Responsible Lending Policy

Responsible lending means ensuring that the borrower is able to repay any loan that is made to them without undue hardship.


If you already have a loan and are having difficulty then you might find the following information useful:

Debt advice and support

National Debtline is a not for profit helpline, run by the Money Advice Trust, which provides free confidential and independent advice on how to deal with debt problems. If you are worried about debt problems you can call National Debtline free on: 0808 808 4000.

They are open:
Monday - Friday 9am-9pm
Saturday 9.30am-1pm

You can also visit: National Debtline's website.

You can also visit:
Citizens Advice Bureau
Or the Consumer Credit Counselling Service.

Responsible Lending Worksheet

A recent FSA survey has suggested that mortgages should not be more than 35% of your post tax earnings. 

The figures in this worksheet are suggested figures.

It is important that you do not accept a loan repayment that is higher than 50% of your disposable income.

Firstly you need to calculate your disposable income.

MONTHLY INCOME

What is your average monthly household income?

This is the earnings or benefits that you and your partner has coming in each month.

You cannot include lodger’s income but you can include any money that they pay you.

FIGURE A - MONTHLY INCOME £

MONTHLY EXPENSES

What are your monthly expenses?

Monthly expenses are THE TOTAL OF 1 TO 7 BELOW:

    • Rent/mortgage, electricity and heating £
    • Groceries £
    • Internet, telephones and cable £
    • Gas, car payments and Insurance £
    • Loans and credit card payments £
    • Child or elder care £
    • Everything else £

 

FIGURE B - MONTHLY EXPENSES £

MONTHLY DISPOSABLE INCOME

NOW DEDUCT FIGURE B FROM FIGURE A AND WRITE RESULT BELOW

 

FIGURE C - MONTHLY DISPOSABLE INCOME £

NOW FIND OUT WHAT YOUR PROJECTED MONTHLY LOAN REPAYMENTS ARE.

YOUR MONTHLY LOAN REPAYMENTS SHOULD BE LESS THAN HALF OF FIGURE C.

IF THE LOAN REPAYMENT IS MORE THAN HALF THEN YOU MAY HAVE DIFFICULTY REPAYING THE LOAN.

IF THE LOAN REPAYMENTS ARE MORE THAN HALF THEN YOU SHOULD EITHER

  • SHOP AROUND FOR A CHEAPER LOAN.
  • CONSIDER REDUCING THE AMOUNT OF LOAN.
  • CONSIDER EXTENDING THE LENGTH OF REPAYMENT.
  • SEEK INDEPENDENT ADVICE SUCH AS THE ORGANISATIONS GIVEN IN CASTLE FINANCE DIRECT RESPONSIBLE LENDING POLICY.

 

REMEMBER! THE LENDER HAS NO WAY OF CHECKING THESE FIGURES AND IT IS UP TO YOU TO BE HONEST WITH YOURSELF.

IF IN DOUBT SEEK INDEPENDENT ADVICE!