Understand the methodology, formulas, and assumptions behind our property affordability and fee calculations.
Our calculator uses industry-standard mortgage calculations combined with current tax regulations and lending criteria for UK and UAE markets. All calculations are performed entirely in your browser using JavaScript - your financial data never leaves your device.
This page explains exactly how we calculate affordability, fees, and investment returns so you can understand and verify our results.
The affordability calculator determines how much property you can afford based on your income, deposit, and market-specific lending rules.
Lenders determine your maximum loan based on your income and regional regulations:
UK lenders typically offer 4.5 times annual gross income:
Max Borrowing = Gross Annual Salary × 4.5 Example: Monthly Salary: £5,000 Annual Salary: £5,000 × 12 = £60,000 Max Borrowing: £60,000 × 4.5 = £270,000
UAE uses Debt Burden Ratio (DBR) - max 50% of gross income for debt payments:
Max Monthly Payment = Gross Monthly Salary × 0.50
Max Loan = Max Monthly Payment × [(1 + r)^n - 1] / [r × (1 + r)^n]
Where:
r = monthly interest rate (annual rate ÷ 12 ÷ 100)
n = loan tenure in months (years × 12)
Example:
Monthly Salary: AED 30,000
Interest Rate: 4.5% annual
Tenure: 25 years
r = 4.5 ÷ 12 ÷ 100 = 0.00375
n = 25 × 12 = 300
Max Monthly Payment = 30,000 × 0.50 = AED 15,000
Max Loan = 15,000 × [(1.00375)^300 - 1] / [0.00375 × (1.00375)^300]
= AED 2,820,000 approximately
Loan-to-Value limits restrict how much you can borrow relative to property value:
Maximum price is constrained by BOTH income and deposit:
Option A (Income Constraint): Max Price by Income = Max Borrowing + Your Deposit Option B (Deposit Constraint): Max Price by Deposit = Your Deposit ÷ (1 - LTV) Actual Max Price = MINIMUM(Option A, Option B) Example (UAE, Resident, First Home): Income: AED 30,000/month → Max Loan: AED 2,820,000 Deposit: AED 400,000 LTV: 80% Option A: 2,820,000 + 400,000 = AED 3,220,000 Option B: 400,000 ÷ (1 - 0.80) = 400,000 ÷ 0.20 = AED 2,000,000 Max Price = AED 2,000,000 (Deposit Constrained)
For your target property price, we calculate the monthly mortgage payment:
Loan Amount = Property Price - Deposit
Monthly Payment = Loan × [r × (1 + r)^n] / [(1 + r)^n - 1]
Where:
r = monthly interest rate
n = loan tenure in months
Example:
Property: £350,000
Deposit: £35,000
Loan: £315,000
Rate: 4.5%
Tenure: 25 years
r = 4.5 ÷ 12 ÷ 100 = 0.00375
n = 25 × 12 = 300
Payment = 315,000 × [0.00375 × (1.00375)^300] / [(1.00375)^300 - 1]
= £1,753/month
For UK calculations, we estimate net (take-home) income after tax and National Insurance:
Personal Allowance: £12,570 (tax-free) Basic Rate (20%): £12,571 - £50,270 Higher Rate (40%): £50,271+ National Insurance (12%): £12,571 - £50,270 Example: Gross Annual: £60,000 Taxable: £60,000 - £12,570 = £47,430 Tax: £47,430 × 0.20 = £9,486 NI: £47,430 × 0.12 = £5,692 Net Annual: £60,000 - £9,486 - £5,692 = £44,822 Monthly Net: £44,822 ÷ 12 = £3,735
We compare your payment to income to determine affordability:
DTI = (Monthly Payment ÷ Monthly Net Income) × 100 UK Thresholds: - DTI < 35%: Comfortable (Green) - DTI 35-45%: Stretched (Amber) - DTI > 45%: High Risk (Red) UAE Thresholds: - DTI < 40%: Comfortable (Green) - DTI 40-50%: Stretched (Amber) - DTI > 50%: Exceeds Bank Limit (Red) Hard Constraints (Instant Red): - Loan exceeds Max Borrowing Power - Loan exceeds LTV limit
SDLT is calculated progressively across bands, like income tax:
Bands (Standard Buyer): 0%: £0 - £125,000 2%: £125,001 - £250,000 5%: £250,001 - £925,000 10%: £925,001 - £1,500,000 12%: £1,500,000+ Additional Surcharges: +3% for second homes (entire price) +2% for non-residents (entire price) First-Time Buyer Relief (if property ≤ £625,000): 0%: £0 - £425,000 5%: £425,001 - £625,000 Example (£400,000, Standard Buyer): Band 1: £125,000 × 0% = £0 Band 2: £125,000 × 2% = £2,500 Band 3: £150,000 × 5% = £7,500 Total SDLT: £10,000
UAE uses a simple flat percentage:
Transfer Fee = Property Price × 4% Admin Fee = Based on price band (see UAE guide) Mortgage Registration = Loan Amount × 0.25% + AED 290 Example (AED 2,000,000): Transfer: 2,000,000 × 0.04 = AED 80,000 Admin: AED 2,000 (for 500K-5M band) Total: AED 82,000
All other fees (legal, valuation, agency, etc.) are calculated using banded lookup tables based on property value. See our UK Guide and UAE Guide for detailed fee schedules.
The calculator tracks cash outflow during construction:
Construction Cash = SUM(All Installment Percentages) × Price Example (60/40 plan, AED 2,000,000): Installments: 10% + 10% + 10% + 10% + 10% + 10% = 60% Construction Cash = 0.60 × 2,000,000 = AED 1,200,000 Handover Cash = 0.40 × 2,000,000 = AED 800,000
ROE measures profit relative to cash invested:
Expected Sale Price = Purchase Price × (1 + Appreciation %) Profit = Expected Sale Price - Purchase Price ROE (Flip) = Profit ÷ Construction Cash Only ROE (Hold) = Profit ÷ Total Cash Equity Paid Example: Purchase: AED 2,000,000 Construction Cash: AED 1,200,000 (60%) Appreciation: 30% Sale Price: 2,000,000 × 1.30 = AED 2,600,000 Profit: 2,600,000 - 2,000,000 = AED 600,000 ROE (Flip): 600,000 ÷ 1,200,000 = 50% ROE (Hold): 600,000 ÷ 2,000,000 = 30%
IRR expresses returns on an annual basis:
Years to Handover = (Handover Date - Today) in years
Annualized Return = (1 + ROE)^(1 ÷ Years) - 1
Example:
ROE: 50%
Years to Handover: 3
Annualized = (1.50)^(1 ÷ 3) - 1
= 1.1447 - 1
= 14.47% per year
All calculations happen in your browser. When you enter data into our calculator:
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Our formulas are based on:
However: These are estimates only. Actual mortgage offers, fees, and investment returns will vary. Always verify calculations with qualified professionals including mortgage advisors, solicitors, and financial planners before making property decisions.
Now that you understand how our calculations work, you can use the calculator with confidence. Remember: