A high
debt-to-income ratio means that your cash flow is quite sensitive to interest
rates, which many people would currently be experiencing.
The goal is
to reduce debt to a level where your standard of living can remain unchanged
almost irrespective of the interest rate setting.
As arule
of thumb, this requires you to reduce your home loan repayments to below
25% of your gross (pre-tax) salary income.
Like
allrules of thumb, this is a guide only, so it is best to consider
your actual cash flow position to ascertain how sensitive it is to interest
rates.
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Jason Gwerder
Tuesday, 24 October 2023
