What you can buy a house for depends on several different aspects of your personal finances. When the bank has to evaluate what you can buy a home for, they look at your salary, your age and how much money you have to live for. Get an overview of the banks’ requirements and how big your funds should be here.
When you want to know how much you can borrow for a house, you can, as a good rule of thumb, multiply your annual gross income by between 3.5 – 5.5 and put your cash savings on top. This means that if you earn 400,000 a year before tax and have a savings of USD 150,000, you can borrow for housing for 1,400,000 – 2,200,000 + your savings of USD 150,000 = you can borrow a house for 1,550. 000 – 2,350,000 USD.
Annual gross income: USD 400,000
Savings: USD 200,000
You can buy accommodation for: 1,550,000 – 2,350,000 USD.
When to borrow for your house purchase
When looking at how much you can borrow for housing, you should go to your own bank, but at the same time ask several other banks. It is different how you are rated among the various banks in the market, and they can look quite differently at how much you can lend to a home. Typically, your gross income determines how much you can borrow. As a rule of thumb, use your debt factor, which specifies the ratio of your total debt to your annual gross income, to find out how much you can borrow.
The lower a debt factor, the greater the chance that you can borrow money in the bank. Your debt factor is calculated by dividing the debt by your annual pre-tax income. Do you owe e.g. $ 1,000,000 and earning $ 550,000 annually, your debt factor will be 1.81. A debt factor of less than 3.5 is assessed as a healthy and normal debt factor. Exceeding the 3.5 is considered risky to lend you money.
When you have to borrow for a home purchase, it is especially your available amount and your debt factor the bank is looking at when they need to assess how much you can borrow for a home purchase. If you have a debt factor below 3.5, if you are a first time buyer, then your debt factor is not an obstacle to borrowing money. Instead, the bank will look more closely at your monthly available amount to make sure you have enough money to live for a month when interest and repayments are paid.
What I can borrow for a house purchase?
According to the Danish FSA’s guidance, a family of two adults and two children should have a minimum amount of USD 13,500 when all the fixed expenses have been paid. Namely, the available amount is the amount left after all your fixed expenses have been paid. If you are single, you must have a disposable amount of USD 5,000 and in addition USD 2,500 per person. children living at home.
Banks and mortgage banks follow the guidelines of the Danish Financial Supervisory Authority, but there is always an individual assessment of how much an available amount should be. Before falling in love with the dream home, it is important to be clear on how much money you can buy a home for. To know how much money you can buy a home for, it is important to find out how much money you can borrow.
It is often possible to get a pre-approval on the loan so that you are already aware of your maximum limit before you start looking. When you have to borrow money, it is cheapest to take out a mortgage. But when you take out a mortgage, you are subject to the Mortgage Act. This means that it is determined how much of the value of the home you can borrow depending on the type of housing.
Thus, if you buy a home, you can borrow a maximum of 80% of the value of the home as a mortgage loan. However, this does not mean that you cannot finance the remaining amount in any other way. You should be able to put at least 5% of the housing price in cash, but the last 15% can be financed with a mortgage in the bank. If you would like good guidance on this, it is recommended that you contact an independent financial adviser.
What is an impartial financial advisor?
In other words, you pay an independent bank advisor an hourly salary to help you manage your finances, give you an overview of your finances, or by getting guidance on your finances. It can cost a bit differently depending on the size of the company you buy from independent banking advice, but typically the price is around USD 1,000-2,000 per hour for impartial banking advice.
When you use the word impartial or independent in the context of financial advice, then you mean that the advisor is not tied to any particular financial products or solutions that give the advisor a profit, rather than the bank where the typical banker and banker profit from selling you financial solutions, but here we look at the exact opposite, ie independent or impartial banking advice. Thus, by choosing impartial banking advice, you choose to bypass the bank’s advice and rely on an independent adviser.
However, keep in mind that if you choose to go to the bank for banking advice, you will often be sold financial products and solutions that are not really of great value to you, but which in turn have a huge value to the bank, especially when one looks long term at what they can earn.