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Debt service-to-income (DSTI) ratio

The limit on the DSTI ratio, an indicator of debt repayment ability, creates income buffers. This limit reduces the risk of loan default, especially during times of crisis. It protects both borrowers and lenders.

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Limits

A loan may not be granted if the household’s resulting loan repayments, including repayments on any other loans, would exceed 60% of its income. The repayment total is calculated using a stressed interest rate. The household’s income is its income less the minimum subsistence amount.

Exemption

  • For up to 5% of new loans, the DSTI ratio may be between 60% and 70%
  • For up to a further 5% of consumer credit with a maturity of up to five years, the DSTI ratio may be between 60% and 70%
  • Under Slovakia’s recovery and resilience plan, the monthly repayments of consumer credit granted for the energy-saving renovation of single-family houses can be reduced by €50
Calculation

Financial stability, Debt service-to-income (DSTI) ratio

RepaymentsRepayment on new loan
Repayments on existing loans (including 3% of credit card and overdraft loans)
Other financial liabilities
Net incomeIncome after contributions and taxes (documented and independently verified)
Minimum subsistence amountMinimum subsistence amount per borrower, spouse and children (pursuant to Act No 601/2003 on the minimum subsistence amount)

The repayment amount is calculated using a stressed interest rate, i.e. a buffer against an interest rate shock.

Legislation

The statutory framework comprises the Housing Loan Act and Consumer Credit Act.

In addition, Národná banka Slovenska has laid down detailed provisons on the DSTI calculation and DSTI limits in the Housing Loan Decree and Consumer Credit Decree.

Further information can be found in financial stability legislation.

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