The debt ratio is the proportion of a household's income devoted solely to repaying property loans or consumer credit. It is an important criterion when applying for a mortgage.
It corresponds to fixed monthly charges as a proportion of fixed income. It is calculated as "(monthly charges,monthly income) X 100". It takes into account stable, long-term financial items.
A borrower's debt ratio is set at just over a third of their monthly income, or 33%.
Fixed monthly costs include :
- Repayments on outstanding loans
- Various pensions that may be paid (alimony, etc.)
- And all other expenses (rent, etc.).
Fixed income includes
Salaries :
- personalised grants
- Property income for owners of rented accommodation
- Various pensions and personalised assistance
- etc.
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