What is my contributory capacity?
The credit institution or credit company is obliged to grant you a loan responsibly, meaning by analyzing your contributory capacity so that the loan granted to you does not exceed the financial means you have, which will allow you to repay this loan. In terms of credit, there is a simple principle that your borrowing limit is determined by your contributory capacity, which is the total financial means a person can mobilize to repay a loan while still being able to repay any other loans and meet daily, ordinary living expenses.
The broker’s first obligation is therefore to inform you of the amount you can borrow in light of all your available income. Thus, the broker may be led to temper a client’s wishes by drawing their attention to the limits of their budget. This creates a dialogue between the broker and the client regarding the project the client plans to undertake. The borrower may sometimes be led to postpone certain work if the desired amount exceeds their contributory capacity.
To what extent can I rely on the income generated by my investments, my securities account, and my savings account?
Financial investments made through banks, brokerage firms, investment companies, or insurance companies should, in principle, generate periodic income. Thus, a savings account produces interest received annually. Bonds, government bonds, and even some stocks produce annual interest and dividends.
These financial assets can certainly be considered to determine and evaluate your contributory capacity.
However, let’s never forget that these financial assets can present a certain degree of risk (this is particularly true for stocks but also for high-yield bonds). Therefore, the credit institution or company cannot solely rely on the production of such assets to grant you a loan.
More generally, what income is considered to determine my contributory capacity?
To know what loan amount you will be able to borrow, a broker will consider the following income:
- Your professional income;
- Your rental income (limited, however, to 80%);
- Your financial income (savings account, securities account, investments).
What income is never considered for granting a loan?
For reasons of legal non-seizability, a credit institution or company cannot consider the following income:
- Family allowances;
- Unemployment and CPAS benefits,
- Alimony (however, the latter positively influences a file’s profile).