Your debt to income ratio is one of the most important factors that a financial lender will look at when you apply for a loan - as it’s essentially your capacity to take on more debt in the form of another loan. The DTI ratio calculation is based on your gross income which is your income before PAYE and other deductions are removed. As the debt to income ratio is based on your current monthly debt payments divided by your gross monthly income – changing either of these values will affect the ratio. If you lower debts or increase your gross income this will lower the ratio whereas increasing debts or lowering gross income will raise it. Typically a DTI ratio of over 40% will be seen as high risk by a lender.
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