Whoops, I don't think I've calculated my debt:income ratio correctly. I thought it was the total amount of your debt to the total amount of gross income with nothing to do with interest. My mistake.
What is your leverage?
- Thread starter frehnejc
- Start date
Whoops, I don't think I've calculated my debt:income ratio correctly. I thought it was the total amount of your debt to the total amount of gross income with nothing to do with interest. My mistake.
boomtown
Just curious when you calculate the 39% do you calculate that as repayment divided by salary plus rent? Or just how much negative you are covering by your wages.
We are about 80% on the first calcualtion so 39% sounds lovely)
I calculate the % as (total interest payments) / (salary + rent).
For example (not real figures) I would calculate like this:
Total debt repayments 60k
Salary 100k
Rent 50k
60k / 150k = 40%.
40% is my personal limit taking into consideration my personal circumstances. Im not going to be able to make further investments until I improve my cashflow or my interest expense drops (I always lock IRs so that means exiting and refinancing or waiting for the balance of the 3 year terms to expire). So I am locked in a holding pattern (but a comfortable one).
Your personal circumstances may be different (for example if you have lots of equity which you are confident you can tap (which I dont) then you may be more comfortable with a smaller cashflow buffer).
There is a debt to icome ratio calculator on that wikipedia link
http://debt2incomeratio.com/
But I would have to disagree with the outcome as it says,
As an example if your in comings are $150k and outgoings are $75k you have a 50% DTI and according to the site, need financial help.
Oh No, after paying the bills how could anyone live on $75k/year.
Is this the same with people supposedly suffering Mortgage stress?
Dave
http://debt2incomeratio.com/
But I would have to disagree with the outcome as it says,
As an example if your in comings are $150k and outgoings are $75k you have a 50% DTI and according to the site, need financial help.
Oh No
, after paying the bills how could anyone live on $75k/year.Is this the same with people supposedly suffering Mortgage stress?
Dave
mortgage stress from memory is people who have 30% or more of their gross wage eaten up by a mortgage.
remember boat boy - income is treated as gross for mortgage stress i think, so if you are on $50k and pay 30% on mortgage ($15k) but this is after tax of ~$15k then you only have $20k to live on.
remember boat boy - income is treated as gross for mortgage stress i think, so if you are on $50k and pay 30% on mortgage ($15k) but this is after tax of ~$15k then you only have $20k to live on.
Cashflow buffer ?? LMAO But no you are right we do have equity we can tap and most of our income is rent when goes out again in interest payments so the numbers look bad when in effect we are maybe on 20% of our actual salary income in terms of loan repayments.
good position to be in! very jealous here.
Thanks but i'm nervous like everyone else. Dont want to go backwards.
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Yeah got mine wrong too, thanks for the folks in pointing out what we were talking about.
I'm at 45% which is still high , but have $150K LOC sitting waiting (tormenting me), so not too concerned at this stage. Plus we are living easily after the bills, so I think we will survive.
I'm at 45% which is still high
, but have $150K LOC sitting waiting (tormenting me), so not too concerned at this stage. Plus we are living easily after the bills, so I think we will survive.
My LVR is currently 71% based on bank valuation done a week ago.
My Debt to Income Ratio (Mortgage Ratio) is 39%. This will improve when I move out and make my ppor my ip.
My Debt to Income Ratio (Mortgage Ratio) is 39%. This will improve when I move out and make my ppor my ip.
