Question

Consider a 30-year mortgage for $383,325 at an annual interest rate of 5.3%. After 12 years, the mortgage is refinanced to an annual interest rate of 3.5%. How much interest is paid on this mortgage?

Round your answer to the nearest dollar.

Answer 1

Ans:

Total Interest on the mortgage: $328,241.

Calculation using excel are as follows:

Mortgage	PV	$3,83,325.00
Years	N	30
Interest rate	Rate	5.30%
Annual payment	PMT(Rate,n,PV)	$    25,795.01
Principal Balance After 12 Years	PV	$2,94,588.80
Balance Years	N	18
Interest rate	Rate	3.50%
Annual payment	PMT(Rate,n,PV)	$    22,334.79

Amortisation Table :

Year	loan Balance	Interest	Installment	Closing Balance
1	$3,83,325.00	$    20,316.23	$25,795.01	$    3,77,846.22
2	$3,77,846.22	$    20,025.85	$25,795.01	$    3,72,077.05
3	$3,72,077.05	$    19,720.08	$25,795.01	$    3,66,002.13
4	$3,66,002.13	$    19,398.11	$25,795.01	$    3,59,605.23
5	$3,59,605.23	$    19,059.08	$25,795.01	$    3,52,869.30
6	$3,52,869.30	$    18,702.07	$25,795.01	$    3,45,776.36
7	$3,45,776.36	$    18,326.15	$25,795.01	$    3,38,307.50
8	$3,38,307.50	$    17,930.30	$25,795.01	$    3,30,442.79
9	$3,30,442.79	$    17,513.47	$25,795.01	$    3,22,161.24
10	$3,22,161.24	$    17,074.55	$25,795.01	$    3,13,440.78
11	$3,13,440.78	$    16,612.36	$25,795.01	$    3,04,258.13
12	$3,04,258.13	$    16,125.68	$25,795.01	$    2,94,588.80
13	$2,94,588.80	$    10,310.61	$22,334.79	$    2,82,564.62
14	$2,82,564.62	$      9,889.76	$22,334.79	$    2,70,119.59
15	$2,70,119.59	$      9,454.19	$22,334.79	$    2,57,238.99
16	$2,57,238.99	$      9,003.36	$22,334.79	$    2,43,907.56
17	$2,43,907.56	$      8,536.76	$22,334.79	$    2,30,109.54
18	$2,30,109.54	$      8,053.83	$22,334.79	$    2,15,828.58
19	$2,15,828.58	$      7,554.00	$22,334.79	$    2,01,047.79
20	$2,01,047.79	$      7,036.67	$22,334.79	$    1,85,749.67
21	$1,85,749.67	$      6,501.24	$22,334.79	$    1,69,916.12
22	$1,69,916.12	$      5,947.06	$22,334.79	$    1,53,528.40
23	$1,53,528.40	$      5,373.49	$22,334.79	$    1,36,567.10
24	$1,36,567.10	$      4,779.85	$22,334.79	$    1,19,012.16
25	$1,19,012.16	$      4,165.43	$22,334.79	$    1,00,842.79
26	$1,00,842.79	$      3,529.50	$22,334.79	$       82,037.50
27	$    82,037.50	$      2,871.31	$22,334.79	$       62,574.02
28	$    62,574.02	$      2,190.09	$22,334.79	$       42,429.32
29	$    42,429.32	$      1,485.03	$22,334.79	$       21,579.56
30	$    21,579.56	$         755.28	$22,334.79	$                 0.06
Total interest	$3,28,241.40

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