There are two important calculations that the lenders use to calculate the maximum that they will lend you. These are: Loan to Value percentage (LTV) and Debt-to-Income ratio (DTI):
This is the maximum percentage of the property value or purchase price that the bank is willing to lend. For example, if you want to buy a property for €100,000 and the maximum LTV is 60%, then you would be able to borrow a maximum of €60,000. Each bank in each country uses a different maximum LTV. Please have a look at the country information here for more details, or contact us for specific information
This is the maximum percentage of your monthly income that the bank will allow for you to cover all debt commitments. Each bank is different what income and what debts they will use, but it will usually use your net monthly income (after income tax is deducted) and will use all mortgages (including the new mortgage), rent and loans. Sometimes, credit card payments, maintenance and other fixed costs will be used. A 33% DTI ratio will mean that one third of your take-home pay can be used towards these repayments. For example: if you earn €5,000 a month after tax and have €1,000 a month existing mortgage and €200 a month car loan, your current DTI will be 24%. If the new mortgage costs €300 a month, then your new DTI ratio will be 30%.
Each lender will use a different calculation and different exchange rate for this affordability calculation. Together with each lender using different payments in the calculation, it can be very difficult for you to know exactly how much the lender will lend you. If you would like us to work out how much you could borrow, please complete the pre-qualification form.