How to calculate what you can afford to repay
Before borrowing, one question matters more than any other: how much can you repay each month without getting into difficulty?
The principle: income minus outgoings
Your repayment capacity is the amount you can put towards a loan each month while still living comfortably. Start from your net monthly income: salaries, pensions, regular income.
Then subtract your fixed outgoings: rent or mortgage, other loans, maintenance paid, insurance.
Debt-to-income ratio
This ratio compares all your loan payments (including housing) with your income. With €2,500 income and €600 rent, a €250 monthly payment brings your ratio to 34%.
Above 35%, a budget is generally considered tight. It is not an absolute rule: what you have left to live on matters too.
What you have left to live on
This is what remains once all outgoings and payments are made. It must cover food, transport, energy and the unexpected.
Three practical tips
- Keep a margin: do not aim for the maximum payment.
- Extend the term carefully: the payment drops but the total cost rises.
- Use the calculator: you instantly see the payment and total cost for each term.
Reminder: borrowing commits you and must be repaid. Check that you can afford the repayments before committing.
