DSTI and DTI limits in Slovakia: what they mean for mortgages
A plain-language explanation of Slovak DSTI and DTI rules, their limits and their impact on investment property financing.
DSTI and DTI are two rules that often decide whether an investor can obtain another mortgage. Both protect households and the banking system from excessive debt, but they measure different things.
DTI looks at total debt
DTI compares total household debt with annual household income. The NBS states that for borrowers up to and including 40 years of age, the standard limit is eight times annual household income, with age-related reductions in some cases.
For investors, DTI matters especially after several purchases. Each property may make sense on its own, but the total debt can hit the limit.
DSTI looks at repayments
DSTI compares repayments of all debts with household income after the subsistence minimum and stressed interest rate are considered. The NBS states a basic limit of 60% of household income, with selected exemptions.
DSTI is sensitive to interest rates and monthly repayments. When rates rise, an investor can hit the limit even while property values increase.
How to use the limits in a portfolio
Investors should not wait for a bank rejection. The limits are worth monitoring continuously together with loan balances, fixation dates and household net income.
- keep a list of all loans and repayments,
- include credit cards and overdrafts,
- simulate a higher rate at refixation,
- do not plan the next purchase only by collateral value.
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