Assume that you've arranged a fixed-rate mortgage of $500,000 at 3% annual nominal rate, amortized over 25 years with 52 payments a year (pay every week), and a 5-year term. You are permitted to lump sum prepay up to 20% of the original principal each year.

If you prepay 5% of the original principal at the end of the 2^nd year, what will be the OSB for the loan at the end of the term?

How many years will it take you to fully repay the mortgage since the end of the 1^st term? Suppose interest rate and your regular payment remain the same for future terms.

How many years will it take you to fully repay the mortgage since the end of the 1^st term? Suppose the fixed rate reduces to 2.5% per year and your weekly payment increases to 600 for future terms.

Answer rating: 100% (QA)

To determine the Outstanding Balance OSB for the loan at the end of the term after prepaying 5 of the original principal at the end of the 2nd year we ... View the full answer