A customer has contacted a financial adviser to plan for the possibility of buying a flat...

 

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A customer has contacted a financial adviser to plan for the possibility of buying a flat in four years' time given that he doesn't have enough money to meet the 20% of the flat's price necessary to be granted a mortgage. The customer is hoping to buy the flat in three years' time and the following information is available: o He has savings of £20,000, which are currently in a deposit paying 4% p.a. compounded monthly, fixed for the three-year period; He will be able to save £600 per month for the next 36 months, which will be deposited in an investment account that pays interest at 4% p.a compounded monthly; The mortgage rate expected to be available in three years' time is 5.9% compounded monthly; o Given the age of the customer and the location of the flat to be bought, he should be able to get at 30-year mortgage Required: i. 11. Calculate the amount accumulated by in three years time and the maximum amount of the mortgage to be taken out Calculate the monthly mortgage payment, assuming this maximum amount is borrowed (rounded to £'000s) and assuming the conditions above. A customer has contacted a financial adviser to plan for the possibility of buying a flat in four years' time given that he doesn't have enough money to meet the 20% of the flat's price necessary to be granted a mortgage. The customer is hoping to buy the flat in three years' time and the following information is available: o He has savings of £20,000, which are currently in a deposit paying 4% p.a. compounded monthly, fixed for the three-year period; He will be able to save £600 per month for the next 36 months, which will be deposited in an investment account that pays interest at 4% p.a compounded monthly; The mortgage rate expected to be available in three years' time is 5.9% compounded monthly; o Given the age of the customer and the location of the flat to be bought, he should be able to get at 30-year mortgage Required: i. 11. Calculate the amount accumulated by in three years time and the maximum amount of the mortgage to be taken out Calculate the monthly mortgage payment, assuming this maximum amount is borrowed (rounded to £'000s) and assuming the conditions above.

Answer rating: 100% (QA)

To calculate the amount accumulated in three years time and the maximum amount of the mortgage to be taken out we need to calculate the future value o... View the full answer