How to determine my mortgage limit?

Knowing your financial situation is your starting point. Let’s start by figuring out how much you can borrow. Knowing your mortgage limit beforehand makes house hunting more efficient and prevents disappointment. It’s not that simple.

There are different factors that determine your mortgage limit:

Income

The initial factor in calculating your maximum loan amount is gross income. This means calculating your ‘loan to income ratio’; it comes down to the balance between the loan and your gross income.

30% ruling

If you’re eligible for this ruling, you receive a 30% tax reduction on your gross salary. We may temporarily use this increased income to increase the maximum borrowing capacity. To calculate your debt ratio, multiply your gross income, including holiday pay and other income sources, by 1.12. All is welcome to higher the amount to loan as providers only calculate with 90% of you income. Klopt dit voor expats? It’s important to include all sources of income to raise your potential loan amount as providers base their lending practices on only 90% of your income.

Mortgage rate

Interest rates fluctuate. You can fix your interest rate for a specific period, or you can opt for a variable interest rate—the shorter the term, the lower the maximum mortgage.

Property value

The balance between the mortgage, the amount of your investment and the value of the property is also of influence. This is called ‘loan-to-value’. The more money you bring to the table, the more comfortable lenders are about lending to you. The maximum amount that providers are willing to finance is 80-85% of the value of the property, depending on a few conditions.

Financial obligations (debt, credits, contracts etc.)

Your monthly expenses influence the portion of your income available for making mortgage payments. Make sure your monthly expenditures are as low as possible. This calculation tool gives you an indication of what your loan limit is.

Contact Bouvy Advies

As knowing your financials is key, contact us for help calculating the maximum loan amount for which you qualify. Bouvy Advies is expert in personal and professional advice. We can provide a mortgage to any expat regardless of nationality and region.

Published On: June 23rd, 2020 / Categories: Expat Mortgage /