Please give an advice on that which offer would you prefer and explain how you can...

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Please give an advice on that which offer would you prefer and explain how you can make a proper comparison! You want to have 10 million HUF for buying your new home. In order to do that, you need to compare the following mortgage loan offers, and then choose wisely! For a careful consideration, you apply the long term inflation rate (3%) as an adequate opportunity cost. The first bank would offer the following terms: interest rate: 8%, coumpounding: annually, maturity: 20 years. There is also a one-off cost at finalising the mortgage application called the "origination fee", and it amounts to 150,000 HUF, and you need to pay it at time T_0 (by origination). The second bank would offer the following terms: interest rate: 7.7%, coumpounding: quarterly, maturity: 25 years. "Origination fee" amounts to 350,000 HUF The third bank would offer the following terms: interest rate: 8.3%, coumpounding: monthly, maturity: 20 years. "Origination fee" amounts to 350,000 HUF This bank will also offer you an allowance of 350,000 HUF at the end of the fifth year, if you choose them and pay your debt decently and regularly (which of course you will, so you take this into account). Please give an advice on that which offer would you prefer and explain how you can make a proper comparison! You want to have 10 million HUF for buying your new home. In order to do that, you need to compare the following mortgage loan offers, and then choose wisely! For a careful consideration, you apply the long term inflation rate (3%) as an adequate opportunity cost. The first bank would offer the following terms: interest rate: 8%, coumpounding: annually, maturity: 20 years. There is also a one-off cost at finalising the mortgage application called the "origination fee", and it amounts to 150,000 HUF, and you need to pay it at time T_0 (by origination). The second bank would offer the following terms: interest rate: 7.7%, coumpounding: quarterly, maturity: 25 years. "Origination fee" amounts to 350,000 HUF The third bank would offer the following terms: interest rate: 8.3%, coumpounding: monthly, maturity: 20 years. "Origination fee" amounts to 350,000 HUF This bank will also offer you an allowance of 350,000 HUF at the end of the fifth year, if you choose them and pay your debt decently and regularly (which of course you will, so you take this into account).

Answer rating: 100% (QA)

To make a wellinformed decision consider the following steps for each option 1 First Bank Calculate ... View the full answer