The amount of income
that an individual has after all personal debts, including the mortgage or home
loan, have been paid. This calculation is usually made on a monthly basis,
after the monthly bills & debts are paid.
Also, when a mortgage
/ home loan has been paid off in its entirety, the income that individual had
been putting toward the mortgage becomes residual income.
Investopedia explains
- Residual Income..
Residual income is
often an important component of securing a loan.
The loaning
institution usually assesses the amount of residual income an individual has
left after paying off other debts each month.
If the individual
requesting the loan has sufficient residual income to take on additional debt,
the loaning institution will be more likely to grant the loan because having an
adequate amount of residual income will ensure that the borrower has sufficient
funds to make the loan payment each month.
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