Five years ago, your friend Chace bought a house with a $(500,000 + ( 10,000)) mortgage from Rarerich Bank, with the first payment occurring two weeks after he took out the loan. He needs to pay off this mortgage in fortnightly instalments over (25 + ) years. At the time of taking out the mortgage, the interest rate was (5. )% p.a compounded semiannually, which was fixed for five years as a "honeymoon rate". Hint: that means the interest rate you will apply will be between 5% p.a. compounded semi-annually to 5.9% p.a. compounded semi-annually, depending on your student number.

Now five years have passed, and five years of payments have been paid towards the mortgage. As such, the remainder of the loan has come up for renewal at a new interest rate. To Chace's disappointment, Rarerich Bank increases the mortgage loan rate to 8.4% p.a compounded quarterly, which is fixed for the remainder of the loan.

Given this information, calculate the increase in Chace's fortnightly payments. In providing your answer, show all relevant working.

Answer rating: 100% (QA)

To calculate the increase in Chaces fortnightly payments we need to first find out the remaining loa... View the full answer