{"id":1009,"date":"2020-07-05T12:45:23","date_gmt":"2020-07-05T12:45:23","guid":{"rendered":"https:\/\/www.cashvisory.com\/blog\/?p=1009"},"modified":"2020-07-09T08:38:32","modified_gmt":"2020-07-09T08:38:32","slug":"loans-how-much-is-too-much","status":"publish","type":"post","link":"https:\/\/www.cashvisory.com\/blog\/loans-how-much-is-too-much\/","title":{"rendered":"Loans: How much is too much?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1009\" class=\"elementor elementor-1009\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-a0e2da4 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"a0e2da4\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-16e2ca3\" data-id=\"16e2ca3\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-f6d8168 elementor-widget elementor-widget-text-editor\" data-id=\"f6d8168\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">\u201cLive within your means\u201d. This phrase has been used historically to suggest that you should only spend on what you can afford now. So much so, that loans have been demonised as a purely negative thing. However, this school of thought is changing with the realisation that loans can be a powerful tool to achieve your goals. If used in the right way, not all debt is bad debt. We have explored the topic of why debt is important and how it can be used positively in our <\/span><a href=\"https:\/\/www.cashvisory.com\/blog\/debt-the-good-the-bad-and-the-grey-in-between\/\"><span style=\"font-weight: 400;\">recent post<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-bf99aeb elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"bf99aeb\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-2b231ac\" data-id=\"2b231ac\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8296122 elementor-widget elementor-widget-text-editor\" data-id=\"8296122\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">That said, like everything else, moderation is key. It is imperative to ensure that the loans you take are aligned with your ability to pay it back without hampering your financial health. So the question is how much debt is too much debt? This is determined by the debt servicing ratio, commonly referred to as debt to income ratio.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-ea6b308 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"ea6b308\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-a3488b9\" data-id=\"a3488b9\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-eb28954 elementor-widget elementor-widget-heading\" data-id=\"eb28954\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Debt Servicing Ratio<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-c2a1e8f elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"c2a1e8f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0ac521d\" data-id=\"0ac521d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-d87bb62 elementor-widget elementor-widget-text-editor\" data-id=\"d87bb62\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Debt servicing ratio is the percentage of your monthly income that is being used to pay your equated monthly installments (EMI). Total Debt Servicing Ratio (TDSR) factors in mortgage and non-mortage EMIs as well.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-923ecec elementor-widget elementor-widget-image\" data-id=\"923ecec\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"496\" height=\"39\" src=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image1.png\" class=\"attachment-large size-large wp-image-1013\" alt=\"\" srcset=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image1.png 496w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image1-300x24.png 300w\" sizes=\"(max-width: 496px) 100vw, 496px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9b3c518 elementor-widget elementor-widget-text-editor\" data-id=\"9b3c518\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Example: Let us say Raj has a gross monthly income of Rs 1,00,000. He has the following EMIs:<\/p><ul><li>Mortgage: Rs 20,000<\/li><li>Study loan: Rs 5,000<\/li><li>Car loan: Rs 10,000<\/li><li>Credit card loan: Rs 2,000<\/li><\/ul><p>Total EMI = Rs 37,000<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0f48a62 elementor-widget elementor-widget-image\" data-id=\"0f48a62\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"414\" height=\"20\" src=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/Debt-Servicing-ratio-calculation.png\" class=\"attachment-large size-large wp-image-1024\" alt=\"\" srcset=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/Debt-Servicing-ratio-calculation.png 414w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/Debt-Servicing-ratio-calculation-300x14.png 300w\" sizes=\"(max-width: 414px) 100vw, 414px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-63cd420 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"63cd420\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-99b036e\" data-id=\"99b036e\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-228b97b elementor-widget elementor-widget-heading\" data-id=\"228b97b\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">How much should the debt servicing ratio be?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-0e2d455 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"0e2d455\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-cd95ad4\" data-id=\"cd95ad4\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-360fe7e elementor-widget elementor-widget-text-editor\" data-id=\"360fe7e\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Debt servicing ratio should ideally be <\/span><b>35% or below<\/b><span style=\"font-weight: 400;\">. Anything above that is considered high. Values of greater than 50% are considered critically high.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-db24c65 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"db24c65\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5479529\" data-id=\"5479529\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-080f250 elementor-widget elementor-widget-image\" data-id=\"080f250\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"768\" height=\"198\" src=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3-768x198.png\" class=\"attachment-medium_large size-medium_large wp-image-1011\" alt=\"\" srcset=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3-768x198.png 768w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3-300x77.png 300w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3.png 975w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4fa0022 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4fa0022\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-c5b6ecf\" data-id=\"c5b6ecf\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-644b8bd elementor-widget elementor-widget-heading\" data-id=\"644b8bd\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">What does the debt servicing ratio tell you?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-f674b3d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"f674b3d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-75fcf2e\" data-id=\"75fcf2e\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-478d858 elementor-section-full_width elementor-section-height-default elementor-section-height-default\" data-id=\"478d858\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-no\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-94d0174\" data-id=\"94d0174\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1f3be6d elementor-widget elementor-widget-text-editor\" data-id=\"1f3be6d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Debt servicing ratio essentially tells you how manageable your debt burden is. Having a high debt servicing ratio indicates either too much borrowing or high interest borrowing. This leads to a very high pressure on your income and compromises your ability to save for other goals like retirement or kids\u2019 education, since most of your income is being spent on repaying loans. It also ill-equips you to handle unforeseen circumstances such as loss of job or a medical emergency, as the debt burden remains the same, but cash flow might be affected.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-e5af166\" data-id=\"e5af166\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-d97c7c4 elementor-widget elementor-widget-image\" data-id=\"d97c7c4\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"238\" src=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-300x238.png\" class=\"attachment-medium size-medium wp-image-1012\" alt=\"\" srcset=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-300x238.png 300w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-768x608.png 768w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4.png 942w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4022559 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4022559\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e96b747\" data-id=\"e96b747\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8fb5364 elementor-widget elementor-widget-text-editor\" data-id=\"8fb5364\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<span style=\"font-weight: 400;\">There are certain unique situations, where an increase in the debt servicing ratio is acceptable, while still keeping it away from critical levels. For example, if you have high interest loans such as credit card loan or personal loan, it might be advisable to increase the EMI amounts, so that you can pay up the loans sooner and save on interest costs. <\/span>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-6cb85a1 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"6cb85a1\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-cc6f35a\" data-id=\"cc6f35a\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-b9b4586 elementor-widget elementor-widget-text-editor\" data-id=\"b9b4586\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">This is however not recommended for more structured loans such as mortgages, where EMI is pre-determined and agreed upon. It is not financially the best option to increase the EMI for such loans as any changes to loan the structure usually incurs costs. <\/span><a href=\"https:\/\/www.cashvisory.com\/blog\/refinancing-your-loans-why-it-matters\/\"><span style=\"font-weight: 400;\">Refinancing<\/span><\/a><span style=\"font-weight: 400;\">, in that case, might be a good alternative to consider to bring down your interest cost and pay up the loan sooner.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-64268a5 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"64268a5\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-080bab3\" data-id=\"080bab3\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-4490625 elementor-widget elementor-widget-heading\" data-id=\"4490625\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">How does the debt servicing ratio impact your ability to get loans?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-bd93985 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"bd93985\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-214fa7c\" data-id=\"214fa7c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-bea1ba4 elementor-widget elementor-widget-text-editor\" data-id=\"bea1ba4\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Apart from your credit score and having a stable income, debt servicing ratio is an important factor that determines whether or not you get a loan. A high debt servicing ratio makes it harder for you to borrow, becoming prohibitive for very high values. For example, most banks in India disqualify a mortgage loan applicant if the ratio is above 40%.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-24a88b0 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"24a88b0\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-831c997\" data-id=\"831c997\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-dba59cf elementor-widget elementor-widget-heading\" data-id=\"dba59cf\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Bottom Line<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-f0d87a3 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"f0d87a3\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-b960d96\" data-id=\"b960d96\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-a410bbd elementor-widget elementor-widget-text-editor\" data-id=\"a410bbd\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">We have come a long way from the mindset of \u201cliving within your means\u201d. Loans are a beneficial tool to upgrade and grow your wealth if used in the right way. However, it is imperative to ensure that the amount of loans you take do not hamper your financial health and long-term stability. The debt servicing ratio is meant to simplify the process of determining the overall impact of loans on your finances &#8211; in the short and long run. A low debt servicing ratio translates to \u201cborrowing within your means\u201d. Whether you\u2019re someone who already has loans or looking to get one, make sure you leverage this key metric to inform your decision-making.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>\u201cLive within your means\u201d. This phrase has been used historically to suggest that you should only spend on what you can afford now. So much so, that loans have been demonised as a purely negative thing. However, this school of thought is changing with the realisation that loans can be a powerful tool to achieve [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1012,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[6],"tags":[],"class_list":["post-1009","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loans"],"uagb_featured_image_src":{"full":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4.png",942,746,false],"thumbnail":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-150x150.png",150,150,true],"medium":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-300x238.png",300,238,true],"medium_large":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-768x608.png",768,608,true],"large":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4.png",942,746,false],"1536x1536":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4.png",942,746,false],"2048x2048":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4.png",942,746,false]},"uagb_author_info":{"display_name":"Admin","author_link":"https:\/\/www.cashvisory.com\/blog\/author\/admin\/"},"uagb_comment_info":4,"uagb_excerpt":"\u201cLive within your means\u201d. This phrase has been used historically to suggest that you should only spend on what you can afford now. So much so, that loans have been demonised as a purely negative thing. However, this school of thought is changing with the realisation that loans can be a powerful tool to achieve&hellip;","_links":{"self":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts\/1009","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/comments?post=1009"}],"version-history":[{"count":6,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts\/1009\/revisions"}],"predecessor-version":[{"id":1321,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts\/1009\/revisions\/1321"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/media\/1012"}],"wp:attachment":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/media?parent=1009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/categories?post=1009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/tags?post=1009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}