How do you calculate what you can borrow?

If you want to borrow money, it is nice to know what the maximum loan is for you. Dr. Watson has a handy calculation tool to calculate your maximum loan. This tool uses the loan standards of the Association of Dutch Finance Companies (VFN) – the same standards that lenders also use. They are based on a table that is regularly updated, which can be found in our overview of the most recent loan standards.

Below we explain how the maximum loan calculation works and how the standards of the VFN are applied in this calculation.

Core of the maximum loan calculation

Core of the maximum loan calculation

When you apply for a loan, you must be able to bear the monthly costs of that loan. The core of the maximum loan calculation and the associated VFN standards is therefore that the monthly costs of the loan do not weigh too much on the budget that you have available monthly. That is why it is calculated what – after deduction of a number of important cost items – you have available monthly to spend on a loan. Your maximum loan will then follow from that amount.

Basic standard and Loan standard

Basic standard and Loan standard

The VFN Code of Conduct uses a Basic Standard and a Loan Standard.

Basic standard: minimum net income

The basic standard is the minimum amount that a household must have in income. If the net income is lower, no loan may be granted. The amount that applies as the basic standard depends on the type of household and is determined by the VFN and the Dutch Banking Association (NVB). In doing so, they make use of advice from Nibud. The amounts are adjusted every year.

Loan standard: standard of living

The loan standard takes into account that people start to live more spacious the higher their income. For example, they drive a larger car and go on vacation more expensive. This is incorporated in the loan standard by adding 15% of the net income (minus the basic standard and the standard for housing costs) to the basic standard. The amount that must remain for the monthly expenses is thus increased.

Loan standard = Basic standard + (15% x (net income – / – Basic standard – / – Standard housing load)) + additional storage

The table uses the ‘Basic standard exclusive’.

There is a ceiling to the increase: from established incomes, there is a minimum standard, which must always be applied. The above calculation of the loan standard is therefore not necessary for these higher incomes.

Please note: the table for higher incomes shows amounts incl or excl allowances and holiday pay.

From maximum monthly charge to maximum loan

From maximum monthly charge to maximum loan

The maximum monthly charge that a loan according to the VFN standards may give is then calculated as follows:

Maximum monthly burden = net monthly income – / – fixed expenses – / – loan standard

The maximum loan then arises from the maximum monthly charge. That works according to the 2% rule: as a borrower you must have at least 2% of the credit amount per month in space to pay the charges. With the maximum monthly charge, you can therefore easily calculate your maximum loan:

Maximum loan = maximum monthly charge / 2% or even easier

Maximum loan = maximum monthly charge x 50

Calculate the maximum loan immediately

Calculate the maximum loan immediately

This is how the maximum loan is calculated according to the VFN standards. The calculation works with standard amounts – tailored to the composition of your household, not to your personal life. For example, lenders, regulators and the government want to prevent people from taking out too high loans.

Of course you do not have to work with the tables and a calculator yourself. We have incorporated these standards in our calculation for the maximum loan: you enter your details and we show you the outcome!

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