Do you want to take out a new loan? Whether it is a car loan, a personal loan, a consumer loan or a mortgage, our brokers will have to examine a series of objective criteria to assess your ability to take out a new credit and especially your ability to repay it without difficulty and without affecting your budget and your quality of life.
Among the few determining criteria that we will briefly recall in this newsletter, the debt ratio will most certainly be the determining criterion.
What are the determining criteria for obtaining a favorable decision on your credit application?
Our brokers will examine several overriding criteria:
- The first criterion will be to ensure your solvency: to do so, our brokers will verify that your professional or other income is sufficient to allow you to repay the credit requested and those that are already in progress;
- Being hired under a permanent employment contract is very important;
- You will be asked to produce your last three salary slips and your bank account statements which prove that your professional income is paid into your bank account;
- You will also be asked to declare all outstanding credit contracts;
- It will be checked that you are not on file or that the cancellation of your file at the National Bank of Belgium dates back well over a year;
- Our brokers will analyze your debt ratio.
What is the debt ratio?
The debt ratio is the percentage represented by your financial commitments (debts, outstanding loans) in relation to all of your income. It is calculated according to the following formula:
Total of your debts or installments to be reimbursed monthly / the total of your monthly income X 100 =….%
For example: Mr. Francis Pastel is employed in a service company. He receives a monthly salary of $ 2,750. He pays each month: $ 1,250 for his mortgage, $ 350 for his car financing and $ 278 for a personal loan.
His debt ratio therefore amounts to: Total of his monthly expenses = $ 1,878 / total of his professional income = 2,750 X 100 = a debt rate of 68%
Analysis of the debt ratio
To obtain a new loan, the debt ratio must move within a range going from 30 to 50% maximum.
If the candidate borrower does not own a home, the debt ratio cannot exceed 40%.
On the other hand, if he owns a home, the debt ratio can reach the maximum 50%.
In the example of Mr. Francis Pastel, he will no longer be able to borrow because his debt ratio of 68% is far too high.
Are there alternative solutions?
Of course when a person reimburses several credits taken in isolation, it is always desirable to carry out a credit consolidation so as to have only one credit.
In the case of Monseiur Francis Pastel, our brokers will make a credit consolidation under the mortgage loan which will allow Mr. Pastel to no longer reimburse a single monthly premium which will be much less than the sum of the three premiums taken isolated.
Thus via a credit consolidation the total premium of Mr. Pastel will amount to $ 1,450, which represents a debt ratio of 52%, which could allow the subscription of a small additional credit which will be included in the same single credit.
Do not hesitate to contact our brokers for more information…