How much can you borrow?
When you visit a bank for a loan a generalised formula is used to calculate what you can safely borrow. Generalised formulae don't tend to work in your favour, so it is worth getting into the "nitty-gritty" of your budget calculations.
Lenders look for stability in lifestyle and income, and they apply what are called the Three C's when assessing a loan application:
Character - your reliability and honesty
Capacity - your income and ability to repay
Capital - your deposit and collateral
In the end, Capacity and Capital have the greatest bearing on the success of your application, however every little bit helps and Character is a factor. Demonstrating preparation, foresight and initiative all count towards the approval outcome.
Capacity is assessed on your ability to repay the loan (income minus expenditure), your credit record and your savings record. This is where your budget comes in - and demonstrating that you are serious and determined about keeping within a budget.
Your credit record
Your credit record is easy to establish. Always paying your bills on time and using a credit card wisely will help. There are occasions when things may go wrong with your credit history. Your credit record may be wrong. Knowing what to do to clear your name is something that we can advise you on.
Lenders like to see that your financial habits increase your asset base. This is not always easy to demonstrate, but we can help you develop the right strategies for building your wealth.
Calculators
Budgeting starts with a few calculations. The links below should help get you started: