Posted by: islamicfinancingnews | December 29, 2012

Setting a monthly budget includes Islamic mortgages

kita-disyorkan-memilih-islamic-loan2 Paying attention to your family finances means setting a budget you can afford that includes meeting the payment requirements of Islamic mortgages and other monthly expenses.

Recent data from Statistics Canada reveals household debt-to-income ratio (DTI) levels currently stand at 164.6%, approximately the same level seen in the U.S. prior to the financial crisis of 2007-2008 and the subsequent housing market bust. This despite repeated warnings from the Bank of Canada and the country’s Finance Minister about excessive borrowing which could leave Canadians vulnerable if they face unemployment or if interest rates climb.

Calculating how much of your income goes toward paying monthly debts can be determined by dividing those debts by your gross monthly income. This equals your personal debt-to-income ratio (DTI) and experts conclude approximately 70% of household credit is related to your mortgage. While the Bank of Canada is expected to keep current low interest rates steady at least for the short term giving people a chance to reduce their existing debt levels, the government is urging Canadians to pay bills quickly and reduce the level of any new debt – good advice for people who may have overextended their budget or applied for new credit when holiday shopping.

An experienced Islamic finance lender can advise you with respect to your debt-to-income ratio and ways to help you create an effective monthly budget that will allow you to pay off existing debt and control what you spend.

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