1. What is the Borrowing Power Calculator With Equity?

The Borrowing Power Calculator With Equity estimates the maximum borrowing capacity by considering both equity and income factors. It provides a comprehensive assessment of borrowing potential for individuals with existing assets.

2. How Does the Calculator Work?

The calculator uses the Borrow Power formula:

Where:

• \( Equity \) — Existing equity value (currency)
• \( LTV \) — Loan-to-Value ratio (percentage)
• \( Income Factor \) — Additional borrowing capacity from income (currency)

Explanation: The equation calculates borrowing capacity by leveraging existing equity at a specified LTV ratio and adding income-based borrowing capacity.

3. Importance of Borrow Power Calculation

Details: Accurate borrowing power estimation is crucial for financial planning, loan applications, and investment decisions. It helps individuals understand their maximum borrowing capacity while maintaining financial stability.

4. Using the Calculator

Tips: Enter equity value in currency, LTV as a percentage (0-100%), and income factor in currency. All values must be valid non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good LTV ratio?
A: Typically, LTV ratios below 80% are considered favorable, as they often qualify for better interest rates and avoid additional insurance requirements.

Q2: How is income factor determined?
A: Income factor is typically calculated based on gross annual income multiplied by a debt-to-income ratio, usually ranging from 4-6 times annual income.

Q3: Does this calculator consider existing debts?
A: This basic calculation focuses on maximum borrowing capacity. For accurate personal assessment, existing debts and other financial obligations should be considered separately.

Q4: Can equity include multiple properties?
A: Yes, total equity can include combined equity from multiple properties, though lenders may apply different LTV ratios to different property types.

Q5: How often should borrowing power be recalculated?
A: Borrowing power should be recalculated whenever there are significant changes in property values, income levels, or interest rate environments.