What is a mortgage capacity report?

The short answer

A mortgage capacity report is a written, impartial opinion on how much mortgage borrowing a person could realistically raise, given their income, their outgoings, their age, their credit position and the money they have available as a deposit. It is prepared for use in family law proceedings, usually where a couple are separating and the question is whether either of them can afford to keep the family home or buy somewhere else.

Why the court wants one

Almost every financial settlement on divorce comes down to housing. Can one party stay in the house and buy the other out? Can they each afford somewhere suitable? Should the sale be deferred until the children have finished school?

None of those questions can be answered without knowing what each person can borrow. If the answer is guessed at, a settlement can be agreed or ordered that turns out to be impossible to carry out — which helps nobody.

In most financial remedy cases the court expects both parties to provide material about their borrowing capacity before the first hearing, and expects it to be obtained jointly wherever the parties can agree on that.

What is in it

A proper report sets out the evidence it relied on, the assumptions it applied, how the affordability calculation works, and how much the answer would change if the assumptions changed. It usually gives a figure or a range, together with the reasoning.

The reasoning matters as much as the figure. A number with no explanation cannot be checked by anyone — including your own solicitor — and is easily challenged by the other side.

What it is not

• It is not a mortgage offer. No lender is bound by it. It is an opinion about what the market would be likely to support.
• It is not a decision or agreement in principle. No application is made and no credit search is carried out on your behalf.
• It is not mortgage advice. It does not tell you which lender to approach or which product to take. When you are ready to borrow, you will need an FCA-authorised mortgage adviser for that; the two roles are deliberately kept separate.
• It is not a valuation of any property, and it is not legal advice.

Who pays, and how much

Where the report is jointly obtained, the cost is usually shared. Where one party obtains it alone, that party normally pays. Fees across the UK market vary widely — from under £100 to several hundred pounds — and the price does not reliably indicate the quality of the analysis. Our fees are published in full.

If you are represented, ask your solicitor to instruct. It is quicker, the questions get framed properly, and the report is more likely to be useful in the proceedings.

How long it lasts

Treat it as reliable for about three to six months. Lending rules change, interest rates move, and your own circumstances change. If your case is still running six months later, the report will probably need updating before a hearing.

What you will be asked for

Payslips and a P60 if you are employed, or accounts or tax calculations if you are self-employed; three months of bank statements; details of any loans, credit cards or car finance; details of childcare and of any maintenance you pay or receive; how much deposit you would have; and your date of birth and when you expect to retire.

If something is genuinely unavailable, say so. A good report records the gap and explains what difference it makes, rather than quietly assuming a figure.

If you have been sent one by the other side

Read the assumptions before you read the conclusion. Check whether it assumed the right care arrangements, the right maintenance figure and term, and a realistic retirement age. Most disagreements about capacity reports turn out to be disagreements about assumptions, not about the arithmetic.

Your solicitor can put questions to the person who wrote it. If you would like us to look at whether a report addresses the right questions, get in touch.