How much can I borrow ?
Lending institutions need potential borrowers to meet two main ‘capacity’ measures.
Firstly, how much a borrower can borrow is directly limited to the amount a borrower can comfortably repay over the life of the loan. In simple terms, how much disposable income does the borrower have from which to meet the loan repayments without putting the borrower into undue financial difficulty?
Secondly, how much does the borrower have in the form of savings that can be used to provide the right borrowing buffer for the lending institution? Savings also play a more significant part in the loan process. A good and steady savings pattern provides a good indicator of a borrower’s ability to meet regular and disciplined repayment requirements.
Lending institutions need potential borrowers to meet two main ‘capacity’ measures.
Firstly, how much a borrower can borrow is directly limited to the amount a borrower can comfortably repay over the life of the loan. In simple terms, how much disposable income does the borrower have from which to meet the loan repayments without putting the borrower into undue financial difficulty?
Secondly, how much does the borrower have in the form of savings that can be used to provide the right borrowing buffer for the lending institution? Savings also play a more significant part in the loan process. A good and steady savings pattern provides a good indicator of a borrower’s ability to meet regular and disciplined repayment requirements.