Question

keliam borrows the sum of $ 200,000 to acquire a cottage with a market value of $ 300,000. he agreed with his bank to repay the loan by paying end-of-period monthly payments and that the loan should be fully amortized over a period of 20 years. his bank grants him the loan at the rate of 7% capitalized semi-annually, renegotiable in 4 years

A-To determine the monthly payment of idriss to be made

B- calculate the total amount paid by idriss to its bank immediately after the 48th payment

C- calculate the mortgage balance immediately after the 48th payment made by idriss

D- calculate the total amount of interest paid by idriss to its bank immediately after the 48th payment E- If in 4 years, at the time of renewal of the loan the mortgage rate is 6% capitalized semi-annually what will be your new monthly payment of idriss

this name is idriss

Answer 1

Monthly equivalent rate applicable to APR of 7% capitalized semi annually= ((1+7%/2)^2)^(1/12)-1

=(1.035^2)^(1/12)-1 = 0.575004%

Monthly equivalent rate applicable to APR of 6% capitalized semi annually= ((1+6%/2)^2)^(1/12)-1

=(1.03^2)^(1/12)-1 = 0.493862%

Part A: Monthly payments= $1,538.62

Part B: Total amount paid immediately after 48 months= $73,853.82

Part C: Mortgage balance immediately after 48 months= $178,588.63

Part D: Total amount of interest paid immediately after 48 months= $52,442.45

Part E: If interest rate is reduced to 6%, new monthly payments after 4 years= $1,441.94

Calculation as below: