What does Existing Liabilities mean?

Existing liabilities is a term defining all of your existent financial commitments, meaning loans you have to pay for, certain debts incurring from credit cards, and other such monetary obligations. Given the fact that once the lender agrees to granting you the loan he takes up a certain degree of risk, he definitely will ask of you a comprehensive note which comprises all your other existing liabilities.

The lender certainly needs this information in order to decide whether you are suitable for the loan, more precisely whether based on your income and on your existing liabilities you can afford to make the repayments towards your mortgage loan on time. Moreover, these existing liabilities act as an estimative guiding tool for the lender, because most of the times the amount of mortgage loan you will be eligible to receive depends on how big is your debt actually.

It is usually stated that the sum of all your monetary obligations towards all your creditors shouldn’t exceed a certain percentage of your monthly income (35%-40% at the top).