A variable-rate mortgage of $135,000 is amortized over 25 years by equal monthly payments. After 12 months the original interest rate of 8% compounded semi-annually. Two years after the mortgage was taken out, it was renewed at the request of the mortgagor at a fixed rate of 8.1% compounded semi-annually for a four-year term.

a) Calculate the mortgage balance after 12 months.
b)) Compute the size of the new monthly payment at the 8.2% rate of interest.
c) Determine the mortgage balance at the end of the four-year term.

Answer rating: 100% (QA)

Solution a The mortgage balance after 12 months will be 13319638 b The size of the new monthly payment at the 82 rate of interest is 10491238 c The mo... View the full answer