Question

YOUR first condo cost you $160,000, and you pay 20% cash as a down payment, for the remainder you arrange a 30-year mortgage at a 6.5% nominal interest rate, with the first payment due in one month.

• a ) What will your annual payments be?
• b) How much of this payment will be interest and how much principal the first year?
• c) How much would you still owe after the third payment?

Answer 1

Since the first payment due in one month which means monthly payment is made.

Therefore,

Monthly payment would be $809.05

Cost	$           1,60,000
Loan Amount	$           1,28,000	=>$160000*80%
Interest	0.54%
Year	360
PMT	$               809.05	=>PMT(B3,B4,-B2)

a) annual payment = $809.05*12 = $9708.56

b) First year Interest = $8277.88 and principal =$1430.69

c) Amount owned after third payment i.e $127650.98

Year	Opening Loan Balance	Mortgage Payment	Interest Payment (opening Balance * 0.54%)	Principal Repayment (Annual Mortgage Payment - Interest)	Closing Loan Balance (Opening Balance - Principal Repayment)
1	$     1,28,000.00	$           809.05	$                       693.33	$                           115.71	$                  1,27,884.29
2	$     1,27,884.29	$           809.05	$                       692.71	$                           116.34	$                  1,27,767.95
3	$     1,27,767.95	$           809.05	$                       692.08	$                           116.97	$                  1,27,650.98
4	$     1,27,650.98	$           809.05	$                       691.44	$                           117.60	$                  1,27,533.37
5	$     1,27,533.37	$           809.05	$                       690.81	$                           118.24	$                  1,27,415.13
6	$     1,27,415.13	$           809.05	$                       690.17	$                           118.88	$                  1,27,296.25
7	$     1,27,296.25	$           809.05	$                       689.52	$                           119.53	$                  1,27,176.72
8	$     1,27,176.72	$           809.05	$                       688.87	$                           120.17	$                  1,27,056.55
9	$     1,27,056.55	$           809.05	$                       688.22	$                           120.82	$                  1,26,935.72
10	$     1,26,935.72	$           809.05	$                       687.57	$                           121.48	$                  1,26,814.25
11	$     1,26,814.25	$           809.05	$                       686.91	$                           122.14	$                  1,26,692.11
12	$     1,26,692.11	$           809.05	$                       686.25	$                           122.80	$                  1,26,569.31
		$       9,708.56	$                   8,277.88	$                       1,430.69