This is a question that many mortgage applicants ask themselves, to know how much I can hope to get in order to direct my real estate research. We explain everything about the principle of the ability to borrow.
How much can I get to buy a property?
This is often the first question that comes to the mind of candidates for real estate acquisition, that is to say, to know how much it is possible to obtain from banks with its current situation. Above all, borrowing capacity will allow us to define precisely the maximum amount that can be obtained with its finances. The ability to borrow is simply the portion of debt repayment, taking into account the maximum indebtedness of 33%. In other words, one-third of the revenue can be spent on monthly loan payments.
To calculate your debt, we will simply list the monthly payments in progress and divide them by the amount of the salary. A borrower who has taken out a car loan with a rent of $ 172 and receiving a salary of 1700 USD will simply have a debt of 10.11%, so he can dedicate 389 USD of his income to the repayment of a mortgage. If this same borrower had no credit, then he could spend 561 USD on a monthly mortgage payment. By multiplying the monthly payment by the duration in months of a bank loan, one can obtain the capacity to borrow gross, without taking into account the interest, the expenses and the insurance which will necessarily reduce this amount. The borrower having a monthly payment of 561 USD will have a gross borrowing capacity of 168,300 USD over 300 months (25 years).
Obtain a more accurate estimate of borrowing capacity
If the calculations above make it possible to quickly obtain an estimate of capacity to borrow, it should be known that these amounts do not take into account the rates and therefore inevitably interest. They also do not take into account the costs related to the implementation of the mortgage and notary fees, as well as borrower insurance which is theoretically optional but always required by the banks. It is for this simple reason that it is necessary to apply for a mortgage online, this allows for a more accurate estimate of the amount to obtain from banks.
The online simulation makes it possible to file a mortgage application based on the ability to borrow gross. The simulator can thus take into account the desired amount but also the situation of the borrower, which allows behind receiving funding proposals with different durations and necessarily, rates adapted for each. The interest of the simulation is without a doubt its free, it makes it very easy to survey the credit institutions for a real estate loan project without being forced to engage. Note that the ability to borrow is not the only element studied, banks will also calculate the debt ratio and the rest to live, it is simply the sum that remains on the bank accounts after deduction of all recurrent expenses and expenses.