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In simple terms, Residual Income is the amount left after all the expenses and debts have been paid off.
Residual Income is Net income minus Equity Charge...... i.e Equity Charge is Equity capital multiply by Cost of Equity.
Income that individual remains after paying his/her personnel expences including existing morgages etc. This usually asses on monthly baisis. Calculation of residual income is very important before grantig a loan to an individual by a bank or any other financial institution. Hence this measures that the borrow has sufficient amount of income to payoff the laon.
The amount of income that an individual has after all personal debts, including the mortgage, have been paid. This calculation is usually made on a monthly basis, after the monthly bills and debts are paid. Also, when a mortgage has been paid off in its entirety, the income that individual had been putting toward the mortgage becomes residual income.
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