Kate and Miles are shopping for a new home. They can afford a down payment of $60,000 and monthly payments of at most $2,500.
Sterling Bank has offered to finance a loan at 8.75% per year compounded monthly for 30 years. What is the most expensive house (to the nearest dollar) they can afford to buy?
Kate and Miles ultimately make a downpayment of $50,000 on a $300,000 home and finance the balance through Creative Financing Inc. at 8.25% per year compounded monthly for 30 years. What monthly payments should Kate and Miles make to pay off the house?
Referring to part (b), use EXCEL to set up an Amortisation Schedule for the first 12 months of the loan. Attach the printout or copy your EXCEL amortisation into your assignment submission.
EXCEL Instructions: Please refer to the amortisation example in Week 3 lecture notes and Topic 3 in the EXCEL Booklet.
Referring to the Amortisation Schedule from part (c), how much interest in total will Kate and Miles pay over the first year of their loan? How much equity (downpayment plus repaid principal) in the house will they have at the end of the first year?