1. What is a Debt To Income Ratio (DTI) Calculator?

Definition: This calculator determines your debt-to-income ratio, which compares your monthly debt payments to your gross monthly income.

Purpose: It helps individuals and lenders assess financial health and borrowing capacity in the UK.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( DTI \) — Debt to income ratio (percentage)
• \( Debt \) — Total monthly debt payments (£)
• \( Income \) — Gross monthly income (£)

Explanation: The ratio shows what portion of your income goes toward debt repayment each month.

3. Importance of DTI Calculation

Details: UK lenders typically prefer DTI ratios below 40-45%. A lower ratio indicates better financial health and borrowing capacity.

4. Using the Calculator

Tips: Enter your total monthly debt payments and gross monthly income in pounds sterling. Income must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What counts as debt in DTI calculations?
A: Include all monthly debt obligations - mortgages, loans, credit cards, car payments, etc.

Q2: What's considered a good DTI ratio in the UK?
A: Generally under 36% is excellent, 36-42% is acceptable, and above 43% may limit borrowing options.

Q3: Should I use gross or net income?
A: UK lenders typically use gross (pre-tax) income for DTI calculations.

Q4: How can I improve my DTI ratio?
A: Either increase your income or reduce your debt obligations.

Q5: Do utility bills count toward DTI?
A: No, only contractual debt payments are included in DTI calculations.