Updated: Jul 1, 2023
An affordability calculator is a valuable tool that enables individuals to evaluate their financial capacity by comparing it to the cost of a mortgage property. While specific affordability guidelines may vary from country to country, the fundamental principle remains the same. Affordability is not a novel concept; it transcends the wealth one possesses and emphasizes the importance of financial feasibility. It is an essential criterion for companies of all sizes, as their economic stability must align with their affordability. Assessing affordability accurately can lead to objective decision-making, providing a foundation for effective financial planning in the long term. As a Muslim, it is crucial to conduct affordability assessments for any purchase, regardless of the type or nature of the item or property. Among the significant decisions an individual makes, owning a house is often a cherished dream. One can make informed choices and secure the best possible outcome by employing affordability assessments. This concept holds particular significance for Muslims, given that limited options are available for truly halal mortgages. Considering the religious principles and guidelines associated with Islamic finance, it becomes imperative to ensure that the affordability of any property aligns with these principles. An affordability assessment can help individuals navigate the complexities of the housing market and make decisions that comply with their religious beliefs. So, our affordability calculator is a valuable tool for individuals and businesses. It allows for a comprehensive financial capacity evaluation, aiding in effective decision-making and long-term financial planning. For Muslims, affordability assessments become even more crucial as they ensure adherence to halal principles when purchasing the property. By utilizing this assessment, individuals can make informed choices and pave the way for a financially secure future.
The calculator gives a valid result from a theoretical perspective; However, every country weighs the topic differently on affordability. For example, in Canada, as per the CMHC (Canada Mortgage & Housing Corporation), if the Gross Debt Service ratio (GDS)<32% and Total Debt Service Ratio (TDS)<40%, then the Mortgage is considered Affordable, and vice-versa. The GDS and TDS give an indication based on financial terms in theory. There are many other factors to consider before buying a Mortgage, such as what other expenses you have; you can borrow money from your friends or relatives to reduce interest costs or may be considering a rental option temporarily until you build enough cash to purchase property, etc. Earning net money is becoming a challenge due to the dynamic behavior of the world, so, it is worthwhile to step back and take an informative decision instead of simply buying out of emotions.
DISCLAIMER: We strive to offer users accurate information to the best of our knowledge. However, laws are subject to change; therefore, the user assumes full responsibility and should utilize the information on our website and this tool as a reference per our terms and conditions. If you believe any part of the calculation is incorrect or contains errors, we kindly request your feedback here.