Disposable income is the money you have left over each month after your essential spending.
How it’s calculated
This is calculated by total Net income for the month then take away all your spending for the month. Net Income is your income after tax and deductions, think of it as your take home pay.
Your disposable income is the amount you have left over each month.
Why lenders want to know about disposable income
Lenders want to see predictable income and that you're responsible with your finances. This is to give them peace of mind that you’ll be able to manage and pay back what they lend you.
They look at average spending behaviour over a long period (between 6 months and a year, but it varies by lender). So if you have to spend more than usual for 1 month, it doesn’t matter too much.