# For this problem, assume that the CMHC mortgage loan insurance premium of 2.40 percent will be added to the mortgage. Paul (from Problem 7) will be able to save $700 per month (which can be used for mortgage payments) for the indefinite future. If Paul finances the remaining cost of the home (after making the $12 000 down payment) at

Chapter 7, Financial Planning Problems #13

For this problem, assume that the CMHC mortgage loan insurance premium of 2.40 percent will be added to the mortgage. Paul (from Problem 7) will be able to save $700 per month (which can be used for mortgage payments) for the indefinite future. If Paul finances the remaining cost of the home (after making the $12 000 down payment) at a rate of 5 percent, compounded semi-annually, over a 25-year amortization period, what are his resulting monthly mortgage payments? Can he afford the mortgage? If not, over what period of time must the mortgage be amortized to make the mortgage payment affordable for Paul?

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