You plan to buy a condo with a price of $375,000. You can pay 20% of...

You plan to buy a condo with a price of $375,000. You can pay 20% of the total price and need to borrow the rest from the bank. Currently TD Canada Trust offers you a fixed rate mortgage of 2.14%. You plan to pay back your mortgage loan in 25 years. Please find out your monthly mortgage payment. After first 4 monthly payments, please find out the unpaid principal balance of your mortgage loan. Please show your detail calculation. If you use financial calculator, please list the input and output numbers.

Solutions

Expert Solution

a) 375000 is the cost of Condo- Finance required only for 80% of it -which works out to $300,000

The Computation of Equated monthly Payments will be

P - is the Principal = 300,000

R- Rate of interest = 2.14 % p.a or 0.0214 /12 per month or 0.001783333

n- Number of Installments = 300 (12 monthly installments for 25 years)

Substituting the values in the formula

The monthly mortgage payment is $1,292.11

The monthly amortisation schedule is as below

As seen from the table, the amount outstanding after payment of the 4th month mortgage is $2,96,936.45 which is highlighted by yellow color.

From the monthlly payment of 1292.11- interest Portion @ ( 2.14/12) % per month on the opening Principal outstanding amount is computed and reduced to Arrive at the principal Portion. This principal is reduced from the opening Principal outstanding to arrive at the closing Principal outstanding at every quarter.

the excel formula for reference

jeff jeffy answered 1 year ago

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