Affordability Assessment

An affordability assessment is a detailed financial evaluation carried out by the bank to determine whether a borrower can comfortably repay the mortgage. It is a mandatory part of the approval process and is designed to ensure both the customer and the bank are protected from financial risk.

Rather than focusing only on income, the assessment looks at a customer’s overall financial position, including earnings, existing debt obligations, and day-to-day living expenses. The goal is to confirm that the borrower can meet repayments not just today, but also in the future. To account for future uncertainty, banks apply a “stress” rate. This tests whether the borrower could still afford repayments if interest or profit rates increase.