KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
Upto what extent you can drown into debt in a month, and come out smoothly by repaying, is best shown by your debt to income ratio. This ratio of debt and income is the key method to determine the availability of cash from you monthly income for repayment of your loans….or, in other words, it expresses your true borrowing capability. That’s why creditors consider debt to income ratio a very effective tool to figure out your monthly payment, and your true financial situation. This ratio clearly calculates the total amount of loan an individual can take.
There are 3 categories of debt to income ratio:
Front End and Back End Ratio
Your creditors tend to analyse your debt to income ratio with two numbers 33/38. 38 is the back end ratio. It is the long term debt ratio. And front end ratio is 33, which is the ratio of housing expenses.
Housing Expense Ratio
The payments of an individual’s housing normally means each and every payment you need to make in your day to day life. That includes all of your monthly payment. It includes costs like- principal, interest, taxes, and insurance. The ratio of housing expense is meant for measurement of an indivudual,s income’s percentage which would cover all his housing payments. A limit would be normally set by your creditors on where your debt to income ratio is wanted by them.
For example, sometimes the creditors set a rule that they want your housing expenses should not exceed 28% of your gross monthly income, and like that.
Long Term Debt Ratio
Long Term Debt ratio is used to calculate the specific percentage of an individual’s monthly earning that is available for making repayment of total debt. The calculation of Long Term Debt ratio includes your housing expenses (PITI), auto loans, credit card loans and some other debts.
Here also, the limit seting trend exists like that of your Housing Expense Ratio. The creditors sets a limit to your long term debt ratio. It is also referred as Back End ratio.
There are 3 categories of debt to income ratio:
Front End and Back End Ratio
Your creditors tend to analyse your debt to income ratio with two numbers 33/38. 38 is the back end ratio. It is the long term debt ratio. And front end ratio is 33, which is the ratio of housing expenses.
Housing Expense Ratio
The payments of an individual’s housing normally means each and every payment you need to make in your day to day life. That includes all of your monthly payment. It includes costs like- principal, interest, taxes, and insurance. The ratio of housing expense is meant for measurement of an indivudual,s income’s percentage which would cover all his housing payments. A limit would be normally set by your creditors on where your debt to income ratio is wanted by them.
For example, sometimes the creditors set a rule that they want your housing expenses should not exceed 28% of your gross monthly income, and like that.
Long Term Debt Ratio
Long Term Debt ratio is used to calculate the specific percentage of an individual’s monthly earning that is available for making repayment of total debt. The calculation of Long Term Debt ratio includes your housing expenses (PITI), auto loans, credit card loans and some other debts.
Here also, the limit seting trend exists like that of your Housing Expense Ratio. The creditors sets a limit to your long term debt ratio. It is also referred as Back End ratio.
Lenders take the debt to income ratio of the borrowers to determine their eligibility to obtain the home mortgage loan. Responsibility also lies upon the borrowers to take out a home mortgage loan which is affordable to them.
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