Debt Repayment Calculator

Brits owe a lump sum of £1.680 Trillion in debt. The average debt per UK adult rounds up to £31,845. To top it all, over 300 people are declared bankrupt every day in the UK. So how big of a problem is debt for Britons? Yes, read that again!

We’re juggling our responsibilities on a unicycle on the rope of life. When debt is thrown into this mix, things can go off-balance. But debt is inevitable. So it’s up to us to find a way to deal with it responsibly to maintain the equilibrium.

To master the art of managing debt(s), you must understand what exactly you’re dealing with – secured or unsecured debt.

While your house might increase in value over time, the home theatre system that you bought with your credit card, won’t. However, one can’t deem everything other than a house as an unnecessary expense. After all, it’s these little things that make a house a home!


Your estimated monthly loan repayments are which equate to % of your disposable monthly income.

Take-home pay
Less: mortgage payment
Equals: disposable income
Mortgage payments as a percentage of your take-home pay%
Total outstanding percentage balance on consumer debt%
Disposable income remaining%
Thus, one must know how to differentiate ‘good’ debt from ‘bad’ debt and to understand just how much debt is too much. There is no single variable to solve this problem. There are formulas to calculate the same. Take a look at our debt calculator to organize your debt better.

How Much Debt is too Much?

Efficient money management is the elixir of your financial life. It is a critical skill that one must acquire. Even the tiniest of mistakes can pile up and jumble up your finances. This can be detrimental to both your financial and mental health. Living in denial about your financial problems will only make things worse. So is there a way to determine if your pile of debt is way more than what you can handle?

Below are some signs that could indicate financial turbulence:

  1. You delay your bill payments: If you live payday to payday and struggling to keep up with your bills, you’re facing financial problems. This adds to debts and your pile of debt may become a mountain in no time. Watch your repayment pattern closely and if you feel like you’re struggling, you need to alter your financial plan.
  2. You don’t know how much you owe: If you’re in denial about your debt situation, it indicates that you’re scared to face your financial problems. There is no easy escape route other than accepting your situation and working towards improving it. Creating a budget and limiting your expenses can be of great help.
  3. Sleep doesn’t come easy to you: Do you toss and turn in bed but still can’t fall asleep? Debt may be the reason behind it. Debt can lead to rising stress levels and loss of sleep, consequently, a dip in your performance. Therefore, efficient financial management helps you bring balance to your lifestyle.

Let us now understand how to calculate our debt affordability.

What is Debt to Income Ratio

Regardless of your income, there is a standard protocol that is followed when lenders assess your affordability and credibility. This ratio of your monthly debt repayment over your gross monthly income is called the debt-to-income (DTI) ratio. You can crunch some numbers using the formula below:

DTI = Recurring monthly debt / Gross monthly income

This ratio is expressed in percentage and should ideally be below 35%.

Recurring Monthly Debt: Recurring monthly income is the sum of repayments that you make every month. For instance, if you have a mortgage payment of £1500, an automobile loan repayment of £100 and £400 for other debts, your Recurring Monthly Debt would be £2000 (£1500+£100+£400).

Gross Monthly Income: Your gross monthly income is the amount of money you’re earning in a month, before you file your taxes, pay for insurance, social security, etc. Now let’s assume that your gross monthly income is £6000. So, as per the above formula, your DTI would be 33% (2000 / 6000 * 1000).

A DTI of over 43% could make it hard for you to get a mortgage. Most lenders are open to DTIs of up to 36%. Financial advisors suggest that your DTI should be maintained at 35% or below. Some might stretch it to the 36%-40% mark. But anything over 35% means that you owe a significant amount of debt.

Warning Signs

Here are some signs that indicate financial trouble or a debt problem:

  1. Your Recurring monthly debt amount is high.
  2. You’re struggling with debt collectors.
  3. Frequent use of balance transfer cards or refinancing to avoid sinking.
  4. You often use cash advances.
  5. Your loan and credit card applications don’t go as planned.
  6. You don’t have and aren’t building an emergency fund/savings fund.
  7. You’re avoiding your debt problems or don’t have an idea about how much you owe.
  8. You do not have a budget in place and you’re constantly in debt.
  9. Your card gets declined as you’ve maxed it out.
  10. Your debts are impacting your relationships.

How to Keep your Debt Under Control

There’s no one rule when it comes to controlling debt. What works for one may not work for the other. So approaching financial planning with a ‘one size fits all’ outlook will not benefit you. However, there are some common pointers that all of us could learn a thing or two from:

  1. Contemplate your spending habits and change them if required.
  2. Make a budget to plan your expenses.
  3. Prioritize your repayments.
  4. Keep making minimum repayments if you’re struggling to repay the full amount.
  5. Build an emergency fund to be your financial cushion.
  6. Avoid taking on new debt.

Tame Your Financial Anxiety

Debt is a necessary evil. We all owe one of the other forms of debt. What’s important is the way you deal with it. If you continue to spend over your limits and make debt a habit, it’ll deteriorate your financial health. Your credit score takes the biggest hit if you fail to demonstrate responsible credit behaviour. This could also ruin your chances of getting a loan in the future.

We understand how difficult making repayments can be in this post-COVID-19 period. With furloughs and wage cuts, it’s not easy to make ends meet. The best you can do is structure your finances into a budget and adhere to it. Even making minimum monthly repayments can build you a compelling case.

Use our calculator to assess your affordability and plan out your finances accordingly.

If you need help bridging some of your financial gaps, LoanTube can help. Compare rate-locked loans from multiple lenders to find your ideal loan.

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