Warning, borrowing money also costs money.
Master Your Budget, the Key to Your Future Loan
If you want to take out a loan, managing your budget is the top priority. Our brokers start by analyzing the ratio of your income to your expenses to assess your borrowing capacity. This page guides you to calmly prepare your application and put all the chances on your side.
Prepare your budget and simulateLegal Notice
** A loan commits you and must be repaid. Check your repayment capabilities before committing. The rates indicated are for information purposes only and subject to approval of your application.
Why is budget management crucial before any application?
A loan is a commitment and must be repaid. To ensure you can meet your monthly payments without difficulty, lenders assess your “repayment capacity”. This analysis is entirely based on the health of your budget.
In practical terms, a clear and well-managed budget demonstrates your seriousness and financial reliability. It’s the basic document that allows our advisors to calculate key indicators like your debt-to-income ratio and your “amount left to live on”.
The 3 pillars of your budget analyzed by our brokers:
- Your stable income: Salaries, replacement income, pensions, rental income… Any regular inflow of money.
- Your fixed expenses (essential charges): Rent or mortgage, insurance, utility bills, other current loans.
- Your variable expenses: Food, transportation, leisure, shopping… This is where you’ll find opportunities for optimization.
By preparing your budget in advance, you not only speed up the processing of your application but also significantly increase your chances of getting a positive response and favorable loan terms.
Free • No obligation • For an informed decision
The benefits of a controlled budget for your loan project
Taking the time to organize your finances before applying for a loan is not a burden, but a real investment in your project:
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Increase your chances of approval: An application with a balanced budget and a controlled debt-to-income ratio is seen as less risky by lenders.
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Get better terms: A good financial profile can give you access to more competitive interest rates (APR), thus reducing the total cost of your loan.
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Borrow with peace of mind: By knowing your exact repayment capacity, you avoid financial stress and the risk of over-indebtedness. You borrow the right amount.
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Speed up the application process: By providing clear information and prepared documents, you make the analysis easier for our brokers and receive a response more quickly.
In short, good budget management positions you as a responsible borrower and gives you control over your financing project, from start to finish.
The 5 Steps to Prepare Your Budget Before an Application
Follow this simple guide to build a solid and transparent file.
1. List all your income
Gather your payslips, tax statements, and proof of additional income. Calculate your average net monthly income.
2. Identify your fixed expenses
List all your recurring charges: rent, insurance, subscriptions, current loans, bills… These are your unavoidable expenses.
3. Calculate your “amount left to live on”
Subtract your fixed expenses from your income. The remaining amount is what’s left for variable expenses (food, leisure…).
4. Optimize your variable expenses
Analyze your variable spending. Are there areas where you can cut costs to increase your saving and repayment capacity?
5. Compile your file
Gather supporting documents (ID, income proof, bank statements). A complete file ensures speed and shows you are serious.
Our advisors are here to help you at every step, especially with calculating your debt-to-income ratio and validating your budget.
Understanding the Ratios That Decide Your Loan
The analysis of your application by a broker or a bank often comes down to two fundamental calculations from your budget:
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The Debt-to-Income Ratio (DTI): This is the percentage of your monthly income that goes toward paying off all your debts (including the new loan requested).
Formula: (Total Debt Payments / Net Monthly Income) x 100.
Generally, it’s recommended not to exceed 33% to 40% to maintain a healthy financial balance. -
The Amount Left to Live On: This is the sum of money you have left each month after paying all your fixed charges (rent, loans, insurance…).
Formula: Net Monthly Income – Total Fixed Charges.
This amount must be sufficient to comfortably cover your daily expenses (food, transport, leisure…) for you and your family. -
Saving Capacity: This is what’s left from your “amount left to live on” at the end of the month. A positive saving capacity, even a modest one, is a very strong signal for lenders. It proves your good management.
Mastering these three concepts allows you to understand the lenders’ logic and to present an application that precisely meets their expectations.
Our Tools and Tips for Effective Budget Management
Managing your budget doesn’t have to be complicated. Here are a few tips to get you started.
Use Budgeting Apps
Many apps (like Mint, YNAB, or even your own bank’s tools) help you automatically categorize your expenses and see where your money is going.
Adopt the 50/30/20 Rule
A simple method: 50% of your income for needs (fixed charges), 30% for wants (variable expenses), and 20% for savings and debt repayment.
Get Help from an Expert
Our advisors aren’t just here to sell you a loan. They can help you analyze your budget, identify areas for savings, and optimally prepare your project.
By adopting good habits, you’re not just preparing a loan application; you’re building a more solid and serene financial future.
Testimonials: They Succeeded Thanks to Good Preparation
“We wanted to renovate our kitchen but were afraid of being rejected. The advisor first helped us list our expenses. After 3 months of follow-up, our budget was clear and our loan application was approved without any issues. The preparation changed everything!”
“I didn’t know what a ‘debt-to-income ratio’ was. By analyzing my budget with the broker, I identified small, unnecessary expenses. Not only did I get the loan for my car, but I also manage to save every month now.”
What stands out from our clients’ experience:
- The clarity and confidence gained from a clear view of their finances.
- The effectiveness of the support in optimizing their budget before the application.
- The peace of mind of approaching a loan project knowing their own limits.
FAQ: Budget & Loan
Find answers here to frequently asked questions about managing your budget for a loan application in Belgium and Luxembourg.
Your budget is a reflection of your financial health. for a lender, it’s the main tool for assessing risk. A well-managed budget shows that you are a reliable borrower capable of repaying a loan. It allows for the calculation of two crucial indicators:
- Your debt-to-income ratio: The portion of your income already allocated to your expenses.
- Your “amount left to live on”: The sum available after paying your bills for daily expenses.
A solid and well-documented budget is the best proof that you can afford a new loan without jeopardizing your financial stability.
There is no magic number, but the standard commonly accepted by financial institutions is between 33% and 40%. This means that the total of your monthly loan payments (including the new one) should not exceed one-third of your net monthly income.
However, this ratio is always balanced against your “amount left to live on”. A person with a very high income might be granted a loan with a DTI above 40% if the amount they have left to live on is very comfortable. Conversely, a 30% ratio might be deemed too high if the “amount left to live on” is very low.
The calculation is simple: Net Monthly Income – Monthly Fixed Charges = Amount Left to Live On.
- List all your net income: salaries, benefits, pensions, etc.
- List all your fixed charges: rent/mortgage, insurance, bills (energy, telecom), taxes, other loan payments, childcare costs, etc.
- Do the subtraction.
The result is the amount you have available for food, transportation, leisure, clothing, and savings. It’s an essential indicator of your day-to-day financial comfort.
Income considered:
- Stable and long-term income: Salaries (permanent contract is ideal, temporary under conditions), civil servant income, pensions, self-employed income (with several positive balance sheets).
- Additional income: Rental income, certain family or replacement benefits (disability, unemployment under stable conditions).
Expenses considered:
- All fixed charges: Rent or mortgage, energy/water/telecom bills, insurance, local taxes.
- All current loans: Personal loans, car loans, revolving credit, credit cards with a line of credit.
- Alimony payments made.
No, it’s not mandatory for a personal loan (unlike a mortgage where a down payment is often required). However, it is a considerable asset.
Savings, even a modest amount, demonstrate several positive things to a lender:
- Your ability to manage your budget and not spend all your income.
- Your capacity to handle an unexpected event without jeopardizing loan repayment.
- Your seriousness and foresight.
In short, while it’s not a deal-breaker, savings greatly increase the lender’s confidence and can positively influence the final decision.
A broker’s role goes beyond just finding a loan. They are your financial advisor for this project. Here’s how they help:
- Objective analysis: They look at your situation with an expert eye and help you comprehensively list your income and expenses.
- Ratio calculation: They accurately calculate your debt-to-income ratio and your amount left to live on, and explain what these numbers mean.
- Optimization advice: They can identify spending areas where savings are possible to improve your application.
- Amount validation: They help you define a realistic and sustainable loan amount relative to your budget.
Using a broker beforehand means having a professional on your side to present the best possible application.