What you need to know to calculate a loan?

The calculation of the amount to be borrowed

 

Set a budget

Before starting your real estate search or a search of the vehicle, it is very important to set a budget. The prospective purchaser will draw up a budget, evaluating its ability to maximum personal contribution and its borrowing capacity. Then, playing on the term of the financing and repayment thereof, the borrower may increase its borrowing capacity.

 

Monthly payment, charges and fixed income

To calculate a debt capacity, it should be to simulate a loan, with a credit rate practice currently on the market. This simulation, performed on several times, will determine the monthly credit, higher or lower. Then, we will add the monthly credit calculated, in all the fixed expenses of the borrower. These charges are fixed; rent paid each month, the monthly payments on loans, the payment of alimony and income taxes. Then it will be the sum of all fixed income of the borrower. These revenues will be, the wages received, the premiums fixed or variable and family allowances, provided they are sustainable.

 

The debt ratio

 

The calculation of the debt ratio

From the figures obtained above, it is then necessary to calculate its debt ratio. The latter obtain by dividing its fixed costs by its fixed income. The criteria for granting credit require having a debt ratio of less than 40%, for that the credit be given. From this basis, it is possible to vary the duration of funding or the total amount of funding, approaching the rate of 40%.

 

Balance

From relatively simple calculations and with the help of a financial calculator or a credit simulator, it is possible to calculate the loan before going to negotiate with banks. This calculation will give the borrower the future, one step ahead in the negotiation.