If you have a project to buy a house, you must first know what your borrowing capacity is, that is to say how much you can borrow to finance your project without unbalancing your budget too much. Buying real estate is indeed an important financial transaction which most often requires the use of a loan that will have to be repaid over the long term. How to define and calculate your borrowing capacity to buy a house?
We talk about borrowing capacity, or also debt capacity, to designate the amount that you can actually borrow to finance all or part of a real estate purchase, without jeopardizing your budget, that is to say by having loan repayments that allow you to leave enough money to live decently, without depriving yourself, and authorizing the payment of your other current purchases and bills.
Your borrowing capacity is determined by your income and expenses when you plan to buy your home. But it must also be estimated over the long term, depending, as much as possible, on any changes to come, for example at professional and family level.
Defining your borrowing capacity is the first thing to determine precisely before embarking on the purchase of a house. Knowing how much money your financial situation allows you to borrow without going into considerable debt is a guarantee of seriousness for the bank or the organization to which you will apply to obtain credit for the purchase of a property. immovable. By having precisely defined your borrowing capacity and therefore your financing plan, you will show your future lenders that you are in financial control of your home purchase project, which is a major investment.
Knowing your borrowing capacity also allows you to better target the property to buy and to know if such a project is financially feasible.
Your mortgages, consumer loans, car loans, etc., already in progress, are the first elements to take into account to define your borrowing capacity, just like your current expenses. These elements will allow you to know precisely your debt ratio and your available "rest to live", both necessary to know how much you will really be able to borrow for the purchase of your house.
The debt ratio is a percentage of the share of your regular and fixed expenses compared to your usual resources. To calculate this debt ratio, you must consider on the one hand the sum of your regular income, and, on the other hand, the sum of your fixed charges. Then divide the total amount of your expenses by that of your income and multiply everything by 100. That is the following formula:Total expenses / Total income * 100.
The income to be considered to calculate your debt ratio is your net wages, bonuses included, your professional income if you are self-employed, your property and financial income, your social benefits, retirement or your alimony.
By fixed charges, we mean the share of credits (real estate, car, consumption, etc.) that you still have to pay within a period of more than 6 months, your rent, any pensions to be paid, as well as the provisional monthly payments of repayment of the loan that will be made to buy your house.
The amount of the contribution for your real estate project, that of a possible assisted loan such as the zero rate loan (PTZ), the desired duration for your loan, as well as the interest rate proposed by the lender are also elements to take into account to determine more precisely your debt ratio.
Beyond a debt ratio of 33%, lenders generally consider that you run the risk of going into debt by borrowing to buy a house and refuse in principle to lend you money.
The "rest to live" represents the amount you have left to live on each month once you have deducted all of your expenses. To calculate this "rest to live", it is advisable to total your financial charges over a year, then to divide this amount by 12, in order to obtain an average per month (the charges are not necessarily monthly) , and subtract this amount from the sum of your monthly income.
Be aware that there are real estate credit simulators available online that allow you to precisely calculate your borrowing capacity so that you do not embark on the purchase of a house without knowing the financial risks to which such an important investment exposes. These simulators also give the possibility of varying the repayment period and therefore the amount of the monthly payments that you will have to pay to repay your loan, and thus make the best decision corresponding to your financial capacities.
