The calculation of your debt ratio is decisive in the decision-making of a bank. It is this rate that will determine whether or not the bank agrees to finance a mortgage. If accepted by the bank, this rate will also define the rate of credit that will be allocated to you. Different elements will weigh in the balance to determine your debt ratio.
How to calculate your total income, step by step
First of all, you must have your pay slips and look at the net wages or the average of the declared wages.
Please note, the calculation of these salaries will differ depending on your situation if you are:
- an employee ;
- a business manager;
- in liberal profession
- an intermittent of the spectacle
For the status of an employee, it will then be a question of calculating the monthly net income which is equivalent to the taxable net cumulation divided by 12 (the number of months annually), visible on the pay slip of December of N-1 and on the income declared on the last tax notice (therefore the pay slip of at least December last year).
If, for example, you are a salesperson and your salary includes a significant and non-negligible part of the variable to allow you to borrow a sufficient and substantial sum, then you must average the last three years of the income declared on the tax notices..
So this way, your additional income from your fixed part can still count for your future purchase.
If the borrower has not yet received a variable salary, it cannot be taken into account.
The resulting formula
It then only remains to apply the formula below and you will get a first estimate of your debt ratio:
+ Support payments received
– Paid alimony
+ Weighted property income
TO REMEMBER !
- The method of calculating your income for the debt ratio will vary according to your profession
- The debt ratio must not exceed 33%
- The debt ratio is the main indicator on your real estate project