Question

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Annette Rintell has been making end-of-month repayments of $1609.25 on a 30-year $200 000 mortgage...

Annette Rintell has been making end-of-month repayments of $1 609.25 on a 30-year $200 000 mortgage with the Riverside Savings Bank for the last 10 years. The interest rate has remained fixed for this period of time at 9% p.a. compounded monthly. Annette has been advised that the Rock Building Society has a special home loan offer at present where they have agreed to meet any payout fees in order to have customer loans transferred to them at their special rate of 7% compounded half-yearly with payments required half-yearly in advance.

Required:

(1) What would be the current payout figure on Annette’s home loan with the Riverside Savings Bank (to the nearest dollar)?

(2) What would be the new half-yearly repayment if the loan was transferred to the Rock Building Society?

Solutions

Expert Solution

(1) What would be the current payout figure on Annette’s home loan with the Riverside Savings Bank (to the nearest dollar)?

Cumulative Principal paid till year 10: $21140.51

Loan Outstanding Balance after 10 years = Loan Amount - Cumulative Principal paid

Loan Outstanding Balance after 10 years = 200000 - 21140.51

Loan Outstanding Balance after 10 years = $178859.49 (Answer)

(2) What would be the new half-yearly repayment if the loan was transferred to the Rock Building Society?

New half Yearly payment: $8092.27 (Answer)

jeff jeffy answered 2 years ago
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