Mortgage affordability assessments look at more than income and debts. Lenders model expected monthly outgoings including energy, council tax, food, transport, and childcare. When costs rise, borrowing falls.\n\nHow Lenders Model Expenses — Most use ONS household expenditure data or internal models. They estimate essential spending based on household size, location, and dependants. The mortgage must be affordable after these modelled expenses. When energy prices doubled in 2022, lenders updated models, reducing borrowing by 5,000 to 20,000 for typical applicants.\n\nThe Practical Impact — A couple with two children might have 500 per month added versus a single person. At 4.5 times income, that effectively reduces borrowing by 15,000 to 25,000 depending on the model.\n\nWhat You Can Do — Reduce declared committed expenditure before applying. Pay off credit cards and loans. Cancel unused subscriptions. Some lenders check bank statements and query regular outgoings. Three months of clean statements showing controlled spending helps.\n\nEnergy Efficiency and Borrowing — Properties with higher EPC ratings have lower modelled energy costs. Some lenders are beginning to factor EPC into affordability, meaning buyers of efficient homes can borrow slightly more.\n\nThe Stress Test — On top of modelled expenses, lenders stress-test at 2% to 3% above the product rate. Rising living costs combined with the stress test create a double squeeze on capacity in inflationary periods.