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Question 3 (20 marks) Stephen and Camilla have a...

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Question 3 (20 marks) Stephen and Camilla have a combined annual gross salary of $90,000. They pay $400 monthly on their credit cards balances and $600 monthly towards their car loan. They bought a condominium 2 years ago for $210,000, with a down payment of 30 percent. They took out a 6.95 percent, 5-year Canadian mortgage amortized over 25 years. The monthly condominium fee is $400 and the annual property tax bill is $3,000. Required: (a)What is the current monthly mortgage payment? (4 marks) (b)How long will it take them to pay off the mortgage if they decided to make bi-weekly payments? Assume that there are 52 weeks in a year. (4 marks) (c)Now, after making monthly payments for two years as computed in part (a), they want to sell their condominium for $240,000. They estimate that legal and real estate fees will be about 4 percent of the selling price. They are considering a house in the $360,000-380,000 price range, on which they would like to have a down payment of 25 percent and on which the monthly property tax is $310. Will they have the 25 percent down payment from selling their condominium? (6 marks) (d) Instead of selling their condominium, Stephen and Camilla are considering applying for a five-year investment loan in the amount of $50,000. The annual interest rate is 6 percent, with blended monthly payments. Will they qualify for the investment loan? (6 marks)

 

Paper#11858 | Written in 18-Jul-2015

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