Question

Jenny takes out a 20-year home loan of $800,000. The bank charges 3.6% p.a. compounded monthly with an interest-only period of 5 years. After the interest only period, Jenny makes equal month-end repayments. Calculate how much Jenny needs to pay every month after the interest only period. (Round your answer to 2 decimal places. Do not include the $ symbol. Do not use comma separators. E.g. 1234.56)

Answer 1

Prinicipal still outstanding at the end of 5 years (P) = 800000; Interest (r) per month = 3.6%/12 = 0.3%; Remaining period in months (n) = 15 years*12 = 180months

EMI = 800000*0.3%*[(1+0.003)^180]/{[(1+0.003)^180]-1} = 2400*(1.003^180)/[(1.003^180)-1] = 2400*1.71462/0.71462 = 5758.43

Jenny has to make payment of 5758.43 at the end of each month