How much to borrow ? Calculate your real estate budget

Assessing your borrowing capacity is essential to plan your purchasing power. Fortunately for you, calculating your real estate budget has never been easier: agenz provides you with a free online calculator.

This calculator estimates the amount around which you can purchase a property based on your borrowing capacity, which depends on your financial situation.

Here are the data it takes into account:

Monthly Income :

This is the total amount of money earned in the month after taxes and other deductions. If you have a co-borrower, you should also add their income to get the total.

Monthly Debts:

These are your monthly expenses such as payments for your car loan or other consumer loans, for example. For instance, if you have a monthly payment of 2500 MAD for your car and a minimum payment of 500 MAD for a household appliance loan, your monthly debt will be 3000 MAD.

Down Payment :

The money you bring for the purchase of your apartment or house. Most banks require a down payment between 10% and 20% of the house price. The larger your down payment, the lower your monthly installments will be. For an apartment priced at 1,000,000 MAD, a 10% down payment is 100,000 MAD, and a 20% down payment is 200,000 MAD.

Debt-to-Income Ratio :

The total monthly payments of your debts divided by your monthly income, expressed as a percentage. Your debt-to-income ratio is a way for banks to measure your ability to manage monthly payments and repay the money you intend to borrow. Our budget calculator defaults to a 45% debt-to-income ratio. The maximum allowable debt-to-income ratio varies depending on banks and your profile.

Interest Rate :

The amount a bank charges you for taking out a loan. Typically, the interest rate is expressed as an annual percentage of the remaining principal. The borrower makes payments (with interest) to the bank over a specified period until the loan is fully repaid. Our budget calculator uses the current national average interest rate.

Loan Term :

The duration over which you will repay your apartment or house: the calculator automatically assumes a term of 25 years (300 months), which is the most common duration. You can modify the loan term in the advanced options.

Property Tax :

The amount you pay for property taxes can affect your borrowing capacity. The budget calculator includes a predefined amount, but you can adjust it in the advanced options.

Home Insurance :

Most banks require home insurance to protect your house in case of accidents such as fire or water damage. Basic coverage will cost you around 350 MAD per year.

Loan Insurance :

It provides protection in case of disability, incapacity, or death and can cover all or part of your debt (depending on the contract's conditions). The insurance amount is calculated as a percentage of the loan amount and can be paid upfront or spread over the repayment period (this rate varies from 2.5% to 3.5% of the borrowed amount).

For example :

Let's assume you have a monthly income of 10,000 MAD. You have no existing debt, and you want to make a down payment of 10,000 MAD.

By borrowing over 25 years, resulting in a 45% debt-to-income ratio with an interest rate of 4.1%, including home insurance and loan insurance, you can afford a property worth up to 895,000 MAD. Your maximum monthly installment will be 4,700 MAD.

Salima Hamrini Editor and journalist specializing in real estate.

10 Oct 2023