4.1.5 Debt load

How much debt is it appropriate to take on? It depends on your personal circumstances: how much money you make and how well you are able to repay the debt.

Experts often distinguish between consumer debt (money owed on items other than a mortgage, such as unpaid credit card balances, auto loans, store loans, etc.) and total debt (which includes mortgage debt in addition to consumer debt). As a general guideline:

Note that these are lenders' guidelines. You may be more comfortable with a lower debt ratio.

If your debt repayments amount to more than these percentages, you have a debt ratio that is higher than recommended by most experts. This might indicate that your debt load is becoming unmanageable, and, with your current income, you will not be able to meet the payments as they come due. This debt load might also discourage lenders from loaning you any more money.


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