AIB’s Guide to Understanding Your Borrowing Power

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If you’re looking to get a loan for a home renovation, travel, a new car or investment, it’s always good to understand how much you can borrow.

To help you answer the common question of “how much can I borrow?”, you can use our AIB Personal Loan Calculator to give you an idea of what figure is manageable for you, before you apply.

The amount you’re able to borrow is determined by the regular repayments you can afford to make. Even though it’s tempting at times, don’t overstretch yourself financially and ‘rainy days’ can and do happen to all of us from time to time.

If you’re looking to improve the borrowing power you have, it’s important to understand the three factors which help determine it.

1. How much you earn?
The base level of income you have will impact on the figure you’re able to borrow. Certain banks may take all of your overtime payments into account, while others may only consider part of these.

When you’re buying an investment property, your bank can include a portion of the income you will receive from rent, while considering periods of vacancy and expenses related to the property.

For payments you receive less often, like bonuses, there may be a requirement for you to show evidence of what these have come in at over the past few years. If you’re thinking of applying for a home loan, start gathering this information now so you have it to hand if you ever need it.

2. What type of spender are you?
After this, you will be asked for your current financial commitments. To ensure comfort of living throughout the course of the loan, you should determine your current living expenses on average taking into account your dependents.

For loans, the actual repayments themselves are taken into consideration. However, with credit cards, many providers assume you have fully reached your limit and consider repayments on a monthly basis based on this balance, despite the fact you may not owe this much.

If your credit card has a high limit, it can be a good idea to ask your provider to reduce this before you apply for a loan.

3. If interest rates were to increase, how would you manage your repayments?
Your loan provider needs to be sure that you can manage the repayments of your loan in the event loan repayments were to rise in the future. By showing that you have current savings to act as a cushion and a habit of regularly saving, you can increase the confidence the lender has in the ability you have to repay. Also, having savings to fall back on in the event of an emergency is a sensible wise precaution to take and can give you extra peace of mind.

If you decide that taking out a loan is the best option for you, AIB can assist with one of our AIB Personal Loans tailored to match your needs. Get a quote or apply online today through AIB Internet Banking and get approval within 3 hours*.

Lending criteria, terms and conditions apply. Credit facilities are subject to repayment capacity and financial status and are not available to persons under 18 years of age. Security may be required.

*Although we aim to provide a decision within 3 business hours, this period may be extended for technical or other legitimate reasons. Our business hours are Monday to Friday from 9am to 5pm, excluding bank holidays.

Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland.