The need for housing leads to either borrowing or renting, but both cases are an expensive affair.
The majority of young couples cannot afford to buy without resorting to the solution of borrowing and without having an amount set aside, as banks do not finance 100% of the value of the property but only 70% or 80% depending on the bank and the category of the prospective borrower.
However, the issue is how much money can someone borrow if they have an average salary of €1,300 to €1,500 or if the average family income is up to €2,500 and should be bound by debt for the next 30 or 35 years.
The first and most important thing is that with the submission of the financial data of the borrower follows research on the part of the banking institution about the prospective client. An advantage is considered if the prospective client works in the broader government sector due to stability, while on the contrary, candidates whose income comes from the private sector or is not stable are treated as high risk.
The competent bank employee checks through the ARTEMIS system each customer with their identification number in order to identify the credit facilities they may have with other credit institutions, such as loans, and whether they are being serviced normally. Credit cards are also checked as well as the overdraft that the prospective borrower may have.
When assessing the applicant's ability to repay, the total debt service amount must limited to 80% of net disposable income.
Net disposable income is calculated as the difference between total monthly income and total monthly expenses. In case the term of the loan extends beyond the expected retirement age of the borrower, the credit institution must take into account the adequacy of the borrower's potential income and his ability to continue to meet his loan obligations after retirement. In case the installments of the loans increase gradually, then the credit institution must evaluate the ability to repay in relation to the respective estimated future incomes.
Also, the credit institutions must evaluate whether the net disposable income it is reasonable. If a couple applies for a mortgage, and the monthly income of both is €2,500, the first step is to deduct the monthly living expenses.
source: Philenews
