Personal finance: Borrowing beyond what's wise poses serious risks - billingsgazette.com
Personal finance: Borrowing beyond what's wise poses serious risks - billingsgazette.com
Personal finance: Borrowing beyond what's wise poses serious risks
Jeff Brown
PERSONAL FINANCE
Here's a new term (to me at least): maximum prudent leverage, or MPL.
I found it in the August edition of Portfolio, a publication produced by JPMorgan Private Bank for its rich clients.
Basically, maximum prudent leverage means the largest amount a person, family or business can borrow without taking on too much risk. That's not the same as the maximum a lender will give you, it's less.
A mortgage company might figure it's just fine for you to use a third of your gross income for debt payments. But it cares only that you can make the payments, it doesn't care about your standard of living.
Personal finance: Borrowing beyond what's wise poses serious risks
Jeff Brown
PERSONAL FINANCE
Here's a new term (to me at least): maximum prudent leverage, or MPL.
I found it in the August edition of Portfolio, a publication produced by JPMorgan Private Bank for its rich clients.
Basically, maximum prudent leverage means the largest amount a person, family or business can borrow without taking on too much risk. That's not the same as the maximum a lender will give you, it's less.
A mortgage company might figure it's just fine for you to use a third of your gross income for debt payments. But it cares only that you can make the payments, it doesn't care about your standard of living.
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