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Debt to Income Ratio - Why HOME LOAN Borrowers NEED to KNOW

Debt to Income Ratio - Why HOME LOAN Borrowers NEED to KNOW

Nook Admin – November 3, 2021

Transcript of the video

We will help you find the right home loan and get it approved by a major bank for absolutely no charge.

There can be a lot of confusing terms to know when getting a housing loan and debt-to-income ratio is one of them.

In this video I'm joined by Mabelle from the Nook team to help explain what DTI is and why it's important when determining your home loan lending ability.

Cy

Hi Belle!

OK, let's start with the basics, what is debt-to-income ratio and how is it calculated Belle?

Belle

So, debt to income ratio is the percentage of a borrowers monthly salary that a bank is comfortable with a person using for debt purposes.

So it is like a limit on the amount of debt that a bank is comfortable with.

Typically a bank will have a debt to income ratio of about 30 to 40 percent of a borrowers monthly salary.

Cy

OK, so can you give an example?

Belle

Yeah sure... so say a potential home loan borrower earns an income of P50,000 per month...most banks would want their monthly debt obligations to not exceed P15k to P20k per month.

But this will depend on the bank. As I mentioned, some banks have a debt to income ratio of 30%. Whereas others will allow up to 40%.

Cy

Right. So why is this important for any potential home loan borrower?

Belle

It’s really important because it can be the difference between a home loan application being declined by one bank but approved by another one.

Cy

Right. So how can a potential borrower know a banks’ DTI before applying?

Belle

Banks don’t necessarily outline every single part of their decision making process.

And for good reason - home loans can be quite complicated and the DTI is just one part of the process.

So it’s not something banks will just advertise or anything.

Cy

Ok so the only way to know if you meet the banks debt to income ratio is go through the whole home loan process and wait for the bank to let you know.

Or, go to Nook, right?

Belle

Thats right Cy. A borrower would have to do the whole process themselves to find out.

Or when you chat to us at Nook, we can work out if you meet the DTI in a matter of minutes.

We can tell you which banks you match the criteria of and we can get the home loan approved for you without you ever leaving home.

Closing

Sounds great. Thanks for joining us here today Belle.

So thats it. That’s why the debt to income ratio is important.

Now, if you are looking for more home loan help, follow or Like us on Facebook, Instagram, YouTube or Twitter. Or visit us at nook.com.ph

And, if you got value from this video today, please share it with just one person you know. We would appreciate that.

See you next time.