Mortgage Credit: Punishing Low Income Families - Meilleurtaux.com

The rest to live – Meilleurtaux.com

When you apply for a mortgage or consumer loan from a credit institution, the latter will use an indicator to see if you are able to pay off your loan: this is how much you have left to live. The latter corresponds to the money left over when you withdraw all of your flat fees from your income.

What is left to live?

The rest is to live. is the difference between your income (salary, pension, allowances, movable and immovable income, etc.) and your fixed costs (rent, taxes, electricity and gas bills, insurance, transportation, communications, etc.), In addition to your monthly credit payments (Consumer credit, mortgage, etc.).

In other words, what is left of life is appointed An amount of money, expressed in euros, that you have left at the end of the month to finance your purchases (food, hygiene, clothing, leisure) or for your precautionary savings. This indicator allows you to know your standard of living or the standard of your family.

What is the rate for your project?

What is the point of knowing what you have left to live?

This is the concept of survival most used When taking out a mortgage, or sometimes a consumer loan. Indeed, when you want to get a loan from a credit institution, the latter will check that the requested loan will not jeopardize your monthly budget. Counting your remaining life, The bank guarantees that you have the financial ability to repay the loan granted.

The remaining living amount required to obtain a loan depends on several factors:

  • Create your family : If you are alone, with two or five people for example, the rest of the living required will vary accordingly.
  • The credit institution with which you get your loan : Each banking institution has its own criteria, adapting them to your professional, personal and financial situation.

It is important to regularly consider how much you have left to live before you visit a credit institution. This is even more true in the context of a mortgage, because the amounts involved are much higher than those of a personal loan.

Contrary to appearances, higher incomes do not necessarily guarantee an increase in the living allowance. In fact, large resources sometimes require equally large expenditures.

but, Keep in mind that the lower your income, the more you need to maintain a high standard of living. High-income families will be able to reduce their fixed costs more easily in order to increase their residual living expenses, which less affluent families will have more difficulty doing (there is always some level of incompressible spending on housing, energy or communications) and will find it difficult to increase their income to raise their standard of living.

ImportantThe danger of a little survival is to create a situation of indebtedness, and then over-indebtedness.

What is the difference with the debt ratio?

To give you credit, banks check your ability to borrow. For this, they calculate your debt ratio in particular. he is Corresponds to the difference between the monthly loan installments and the net income of your familyThe maximum amount you can repay the bank per month.

debt ratio Determined by regulation, up to a maximum of 35% By the High Council for Financial Stability (HCSF) since January 1, 2021. You will therefore not be able to allocate more than 35% of your monthly income, a significant third, to paying off your credit, including insurance.

Previously, this was just a practice for the banks which gave them some flexibility. Two solutions are available to you to respect this new limit: lower your credit amount, or extend the repayment period. Note, however, that the maximum term of indebtedness is 25 years.

The rules for accepting a loan differ between credit institutions. A file may be accepted in one bank and rejected in another.. Concretely, an identical debt ratio can have a different impact on your daily life depending on the number of people in your household.

So the debt ratio is only an indication of your ability to borrow. To calculate this, divide the amount of monthly payments by the amount of income, and multiply by 100.

The formula is simple:

Debt Ratio = (Borrowing Fee / Net Income) x 100

Example :

We calculate the net income of the family: 5,000 euros
We acknowledge the loan fee: €800
We subtract the cost of borrowing from the net income: (800/5000) x 100 = 16

In this case, the family debt ratio will be 16%.

What is the rate for your project?

How is the rest calculated for living?

There is no official standard for calculating the remainder to live. Therefore, each credit institution can set its own conditions for accepting the loan. You must list all your monthly income sources and your fixed monthly fees (regular and non-compressible). If these revenues and expenses change from month to month, then the average is determined over the year.

The formula is simple:

Remaining to live = family income – fixed fees

side RevenuesIn particular, salaries, pensions and allowances (unemployment, RSA, etc.), movable and immovable incomes, pensions and family benefits, scholarships, family assistance, and other types of resources such as reimbursement, bonuses, etc. are taken into account.

side flat feeIn particular, rent, various fees such as electricity, gas, water, taxes (income tax, housing tax, property tax), insurance (housing and cars), health costs (mutual), tuition fees, telecom subscriptions (telephone / mobile / internet / TV), and paid pensions are taken into account. (Example: alimony), as well as loan repayment installments.

On the other hand, current and incidental expenses, such as food, hygiene, clothing, precautionary savings or entertainment, are not counted. In fact, these are very unstable and erratic loads.

Example: Calculating the average survival rate

The family consists of two people: one person A and the other B.

Below is the monthly income for each of them:

  • Person A : 2000 EUR
  • person b : 3000 EUR

Here are their fixed monthly fees:

  • repay a Credit in the amount of 800 euros ;
  • repay from Various fillings (Electricity, gas, water, taxes, etc.) For a total amount of 1500 euros.

To find out the rest of their life, apply the following method:

  1. We add the income: 2000 + 3000 = 5000
  2. We add the fixed costs: 800 + 1500 = 2300
  3. We subtract fixed costs from income: 5000 – 2300 = 2700

So the remainder of this family is 2,700 euros.

Then we do the following: (2300/5000) x 100 = 46

The Family living allowance rate This is 46%.

What is the rate for your project?

Frequently asked questions about Rest to Live

What is the difference between the ratio of debt and the rest to live?

The ratio of debt and the rest to live Additional indicators to consider when granting a loan (real estate loan or personal loan). If the debt ratio has been set at 35% by the High Council for Financial Stability (HCSF) since January 1, 2021, each credit institution is free to set the remainder threshold to live according to your situation.

The debt ratio expresses the share of income devoted to repaying loans, while the rate of remainder to live takes into account Your fixed costs as such Your monthly loan payments to determine your available funds.

What is the point of knowing what you have left to live?

If you intend to take out a home loan or a personal loan from a credit institution, then determining your remaining livelihood will allow you to find out your financial capabilities in order to repay this loan. There is no minimum living required by banks. It varies according to your income, but also according to the composition of your family or where you live. What is left to live is one of the main indicators that credit institutions take into account to determine the amount of credit.

How is the rest calculated for living?

Calculating what is left to live is relatively simple. he is Corresponds to the subtraction between your income (salary, pension, allowances, income from movable and immovable property, etc.) and your fixed charges (rent, taxes, electricity and gas bills, insurance, transportation, communications, etc.), In addition to your monthly credit payments (Consumer credit, mortgage, etc.). Note that each credit institution can set its own conditions for accepting a loan.

Leave a Comment

Your email address will not be published. Required fields are marked *