Question

suppose that you have just celebrated your 18th birthday today. You decide to start saving money to purchase your first home in 12 years, which will cost $650,000. You aim to save sufficient money to pay the 15% initial deposit, and will take a mortgage to cover the 85% of property cost. The nominal interest rate for the savings account is 13% per annum compounded fortnightly. The nominal interest rate charged by the mortgage provider is 6% per annum compounded monthly.

• Option 1: The mortgage will be repaid over 20 years by equal fortnight-end-instalments.

c) Calculate the fortnightly repayment.

d) Calculate the interest component for the 24^th repayment.

e) Calculate the mortgage outstanding balance immediately after the first 200 payments. (1 mark)

Answer 1