CeMAP Calculations: Every Formula You Need, With Worked Examples

CeMAP® calculations are the numeric questions in the Walbrook (LIBF) unit exams: mostly in MRT1 and MRT2 (CeMAP 2) and in the CeMAP 3 (ASEW) case studies. This page gives one formula and one worked example for each type, using UK rules and 2026/27 figures, with England, Scotland and Wales shown separately where property tax differs. The numbers are our own. For how many marks each unit needs, see our CeMAP pass mark guide; for every rate and band in one place, see the CeMAP tax tables.

Which calculations appear in the CeMAP exams?

The calculations in the CeMAP exams cluster in three units: MRT1 tests purchase costs, LTV and higher lending charges; MRT2 tests early repayment, overpayments and porting; and CeMAP 3 case studies combine them with affordability, buy-to-let and protection figures.

Unit	Calculations (our reading of the syllabus)	Where in the syllabus
FRE1, FRE2	Almost none; numbers are facts to recall	—
MRT1	Fees and taxes on purchase, LTV, deposit, higher lending charge, guarantor and additional security	AC7.1, AC8.1 to AC8.3
MRT2	Early repayment charges, lump sum overpayments, porting, further advances	AC2.5 to AC2.7, AC1.1
CeMAP 3 (ASEW)	LTV, loan to income, affordability, stamp duty, ICR, sums assured	AC1.2, AC2.7, AC5.1

The specification does not publish how many calculation questions each paper holds; the CeMAP qualification specification lists outcomes only. Our case studies usually carry two or three numeric questions out of ten. That is our convention, not an official split.

Key fact: Every CeMAP calculation is multiple choice. The wrong options are usually the answers to specific mistakes, so a wrong method often leads you to a listed option.

How do you calculate LTV and the deposit?

Loan to value is the loan divided by the lower of the purchase price and the lender's valuation, times 100: a £240,000 loan on a £300,000 home is 80% LTV, and the deposit is the remaining 20%, or £60,000.

Formula: LTV = loan ÷ lower of price and valuation × 100. Deposit = price − loan.

Worked example. A buyer agrees £300,000 and wants a 90% LTV mortgage. The valuation comes back at £290,000.

1. The lender uses the lower figure, £290,000.
2. Maximum loan at 90% = £290,000 × 0.90 = £261,000.
3. Deposit needed = £300,000 − £261,000 = £39,000, which is 13% of the price, not 10%.

A down-valuation therefore raises the deposit. Where a lender still uses a higher lending charge (MRT1 AC8.2), it is typically a percentage of the part of the loan above its LTV threshold, and the question gives you the rate. Our loan to value guide covers LTV bands and pricing.

Exam tip: If one option equals the deposit percentage and another equals the LTV, you have found the trap. Re-read whether the question asks for the loan side or the deposit side.

How do you calculate loan to income and affordability?

Loan to income is the loan divided by gross annual income: £300,000 on a joint £80,000 is 3.75 times. Affordability is a different test, under MCOB 11.6, comparing net income with committed and essential spending at a stressed interest rate.

LTI formula: LTI = loan ÷ gross annual income (joint income for a joint loan).

Worked example. Joint income £58,000 + £22,000 = £80,000. Loan £300,000. LTI = 300,000 ÷ 80,000 = 3.75.

The Bank of England's Financial Policy Committee keeps a limit on high-LTI lending: no more than 15% of new mortgages, across the market, at 4.5 times income or more. From 28 October 2026 the firm-level cap was removed, so an individual lender may exceed 15% while the aggregate stays within the limit, according to the Bank of England policy statement.

Affordability. MCOB 11.6 requires the lender to assess net income against committed expenditure and basic essential and quality-of-living costs, on a capital-and-repayment basis. Under MCOB 11.6.18R it must consider likely rates over at least 5 years and assume a rise of at least 1%, unless the rate is fixed for 5 years or more.

Worked example. Net household income £4,100 a month; committed spending £450; essential and quality-of-living costs £2,100. Surplus = £4,100 − £450 − £2,100 = £1,550. A £240,000 loan over 25 years costs £1,334 a month at 4.5%, and about £1,474 at the stressed 5.5%. The surplus covers the stressed payment, so the loan passes this simplified test. Real lenders use their own models; the exam gives you the figures. Our mortgage affordability guide covers the rules.

Key fact: LTI is a lending policy measure. Affordability under MCOB 11.6 is the legal duty. A loan can pass one and fail the other.

How do you calculate stamp duty, LBTT and LTT?

Stamp duty, LBTT and LTT are slice taxes: you charge each band's rate only on the part of the price inside that band, then add the slices. A £420,000 home costs £11,000 SDLT in England, £15,350 LBTT in Scotland and £12,000 LTT in Wales.

Method:

1. Identify the nation: SDLT in England and Northern Ireland, LBTT in Scotland, LTT in Wales.
2. Check the buyer type: first-time buyer, additional dwelling, company or non-resident.
3. Split the price into the bands.
4. Multiply each slice by its rate and add the results.

Worked example: a £420,000 home, 2026/27 rates.

Slice	SDLT (England)	LBTT (Scotland)	LTT (Wales)
First band	£125,000 at 0% = £0	£145,000 at 0% = £0	£225,000 at 0% = £0
Second band	£125,000 at 2% = £2,500	£105,000 at 2% = £2,100	£175,000 at 6% = £10,500
Third band	£170,000 at 5% = £8,500	£75,000 at 5% = £3,750	£20,000 at 7.5% = £1,500
Fourth band	—	£95,000 at 10% = £9,500	—
Total	£11,000	£15,350	£12,000

Variations on the same price:

• First-time buyers in England pay 0% to £300,000 and 5% on the next £120,000: £6,000. Above £500,000 the relief is lost completely.
• An additional dwelling in England adds 5 percentage points to every band: £11,000 + 5% × £420,000 = £32,000.
• An additional dwelling in Scotland adds the 8% Additional Dwelling Supplement on the whole price: £33,600 on top of the LBTT.
• Wales has no first-time buyer relief.

The bands are on gov.uk, Revenue Scotland and the Welsh Government.

Exam tip: The most common wrong option charges the top rate on the whole price. For £420,000 in England, 5% × £420,000 = £21,000 is a trap answer.

How do you calculate an early repayment charge?

An early repayment charge is the ERC percentage for the current year multiplied by the amount repaid early, after any penalty-free allowance: repaying £30,000 when 10% of an £180,000 balance is free leaves £12,000 charged at 3%, which is £360.

Formula: ERC = ERC rate × (amount repaid − penalty-free allowance).

Worked example. Balance £180,000 on a five-year fix in year 3, with an ERC of 3% and a 10% annual overpayment allowance.

1. Penalty-free allowance = 10% × £180,000 = £18,000.
2. Lump sum overpayment of £30,000: charged amount = £30,000 − £18,000 = £12,000.
3. ERC = 3% × £12,000 = £360.
4. Full redemption instead: 3% × £180,000 = £5,400, because the allowance usually applies to overpayments, not to repaying the whole loan. Check the offer.

MCOB 12.3.1R requires an ERC to be expressible as a cash value and to be a reasonable pre-estimate of the lender's cost of early repayment. The guidance says lenders should not use the "Rule of 78". Porting the mortgage to a new property (MRT2 AC2.7) can avoid the charge if the lender agrees.

Key fact: An ERC is set by the contract, not by a regulator's table. The exam gives you the percentage; your job is to apply it to the right amount.

How do you calculate rental cover for buy-to-let?

Rental cover, the interest cover ratio, is monthly rent divided by monthly interest at the lender's stress rate: £1,250 rent against £916.67 interest on £200,000 at 5.5% gives 136%, which passes a 125% test and fails a 145% test.

Formula: ICR = monthly rent ÷ (loan × stress rate ÷ 12) × 100. Maximum loan = (monthly rent ÷ required ICR) × 12 ÷ stress rate.

Worked example. Rent £1,250 a month; loan requested £200,000; stress rate 5.5%.

1. Monthly interest at the stress rate = £200,000 × 5.5% ÷ 12 = £916.67.
2. ICR = £1,250 ÷ £916.67 = 1.36, or 136%.
3. At 125%: maximum loan = (£1,250 ÷ 1.25) × 12 ÷ 0.055 = £218,182. The £200,000 request passes.
4. At 145%: maximum loan = (£1,250 ÷ 1.45) × 12 ÷ 0.055 = £188,088. The request fails by about £12,000.

The PRA's supervisory statement SS13/16 describes 125% as the current industry standard minimum ICR and expects lenders to assume a borrower rate of at least 5.5% over the first five years, with more room for rates fixed for five years or more. Many lenders set a higher ICR, such as 145%, for higher-rate taxpayers, because individual landlords get only a 20% tax credit on mortgage interest. That higher figure is lender practice, not a PRA rule. Our buy-to-let mortgages guide covers the underwriting.

Exam tip: Check whether the question gives a monthly or an annual rent. Mixing the two produces an ICR twelve times too high or too low, and that figure is usually an option.

How do interest-only and repayment costs compare?

Interest-only and repayment costs compare like this: a £200,000 loan at 4.5% over 25 years costs £750 a month interest-only, leaving the full £200,000 owed at the end, or £1,111.66 on repayment, clearing the debt with about £133,500 of interest in total.

Interest-only: monthly payment = loan × annual rate ÷ 12 = £200,000 × 4.5% ÷ 12 = £750.

Repayment (capital and interest): monthly payment = P × r ÷ (1 − (1 + r)^−n), where P is the loan, r the monthly rate and n the number of months. With P = £200,000, r = 0.375% and n = 300, the payment is £1,111.66. In the exam you will normally be given the payment or a cost per £1,000 borrowed rather than asked to use the formula.

Over 25 years	Interest-only	Repayment
Monthly payment	£750.00	£1,111.66
Total paid	£225,000	£333,499
Interest paid	£225,000	£133,499
Owed at the end	£200,000	£0

Under MCOB 11.6.41R an interest-only loan needs a credible repayment strategy for the capital, and the affordability assessment is still on a repayment basis except for compliant interest-only.

Roll-up on a lifetime mortgage

A lifetime mortgage with no payments compounds: balance = loan × (1 + rate)^years. A £60,000 loan at 6% for 15 years grows to about £143,800 (£60,000 × 1.06^15). By the rule of 72, it doubles in roughly 12 years (72 ÷ 6). Our equity release guide covers the products.

Key fact: A cheaper monthly payment is not a cheaper mortgage. Over 25 years the interest-only borrower in the table pays £91,500 more interest and still owes the capital.

How do you work out a protection sum assured?

A protection sum assured is matched to the need: decreasing term assurance for the outstanding repayment mortgage, level term for an interest-only loan, and family income benefit or income protection for lost earnings, such as £2,000 a month for 16 years.

Need	Cover	How to size it
Repayment mortgage on death	Decreasing term assurance	Sum assured = loan; term = mortgage term
Interest-only mortgage on death	Level term assurance	Sum assured = loan, level for the term
Family's income on death	Family income benefit	Monthly need, paid to the end of the term
Income during illness	Income protection	Benefit set by the insurer's limits; deferred period matched to sick pay
Lump sum on serious illness	Critical illness cover	Usually the loan, plus any extra need

Worked example. Amir (38) earns £48,000 and has a £180,000 repayment mortgage with 22 years left. His partner and two children would need £2,000 a month until the youngest turns 18, in 16 years. His employer pays full sick pay for 6 months.

1. Mortgage on death: decreasing term assurance, £180,000 over 22 years.
2. Family income on death: family income benefit of £2,000 a month (£24,000 a year) for 16 years. The most it could pay is £384,000, if he died on day one, and the remaining value falls each year.
3. Income in illness: income protection with a 26-week deferred period, so benefit starts when sick pay stops. The benefit cap is set by the insurer, not by regulation.

Protection sales fall under the FCA's ICOBS rules. More on each product is in our mortgage protection guide.

Exam tip: When a case gives both a mortgage and dependants, the answer usually needs two covers: one for the debt and one for the income. An option that covers only one is often the trap.

Can you use a calculator in the CeMAP exams?

Walbrook's specification and public exam pages do not state a calculator rule for the CeMAP exams, which run on Brightspace with remote invigilation; check the on-screen exam instructions before you start rather than assuming either way.

What is known from Walbrook's exam and assessment information: the exam is taken on a PC or laptop, you complete a 360-degree room scan first, and there are no toilet breaks. Whether an on-screen or a physical calculator is allowed is not stated. Two habits cover both outcomes:

1. Practise every calculation type with a basic calculator until it takes under two minutes.
2. Practise estimating: 2% of £125,000 is £2,500; 5.5% of £200,000 a year is £11,000, or about £917 a month. An estimate lets you rule out two options before you calculate.

Key fact: Most CeMAP calculations need only multiplication, division and subtraction. If a question seems to need a financial calculator, the payment figure is probably given somewhere in the case.

Your calculation drill plan

A calculation drill plan takes about two weeks alongside your unit revision: learn one formula a day from this page, drill it in the matching topic, then do the numeric questions inside full timed mocks until each takes under two minutes.

Days	Calculation	Drill on the web
1 to 2	LTV, deposit, higher lending charge	MRT1 fees and charges
3 to 4	SDLT, LBTT, LTT	MRT1 fees and charges
5 to 6	ERCs, overpayments, porting	MRT2 transferring and amending mortgages
7 to 9	LTI, affordability, repayment versus interest-only	ASEW mortgage solutions
10 to 11	ICR and landlord tax	ASEW specialist lending
12 to 14	Sums assured, then full cases	CeMAP 3 case studies and ASEW mock 1

On the web, calculation drills are these topic drills, which come with Pro. The app also has a Calculation Lab; there is no separate web page for it yet. The free papers for MRT1, MRT2 and ASEW include numeric questions as well, so you can test each method under time before you subscribe.

Write every formula on one sheet, label each tax figure "2026/27", and replace it with the figures in Walbrook's tax table when your materials arrive. Our readiness rule applies to calculations too: three mocks in a row at 85% or more, with every topic at 80% or more. It is a guide, not a pass guarantee.