At exactly 35 year of age, with $100,000 in his savings account Alex plans to buy...

Transcribed Image Text:

At exactly 35 year of age, with $100,000 in his savings account Alex plans to buy a house. A bank is willing to loan him the necessary funds provided that he puts up 20% of the purchase price, uses the house as the collateral and is committed to making monthly payments for the next 15 years. a) With stamp duty of 2% of the purchase price payable by the buyer, how much is the most expensive house that Alex can afford right now? Suppose the house that Alex buys is worth $420,000. He pays the stamp duty and 20% of the purchase price by himself and borrows the rest from the bank. The interest rate is fixed at 10.2% per annum compounded monthly for the first 36 months. After 36 months, interest rate is revised annually benchmarked from the central bank rate. b) The monthly payments for the first 36 months is determined based on the assumption that the interest rate is fixed at 10.2% for the full duration of the loan. Determine the monthly payment for the first 36 months. c) Calculate the outstanding balance immediately after the 36th monthly payment. At exactly 35 year of age, with $100,000 in his savings account Alex plans to buy a house. A bank is willing to loan him the necessary funds provided that he puts up 20% of the purchase price, uses the house as the collateral and is committed to making monthly payments for the next 15 years. a) With stamp duty of 2% of the purchase price payable by the buyer, how much is the most expensive house that Alex can afford right now? Suppose the house that Alex buys is worth $420,000. He pays the stamp duty and 20% of the purchase price by himself and borrows the rest from the bank. The interest rate is fixed at 10.2% per annum compounded monthly for the first 36 months. After 36 months, interest rate is revised annually benchmarked from the central bank rate. b) The monthly payments for the first 36 months is determined based on the assumption that the interest rate is fixed at 10.2% for the full duration of the loan. Determine the monthly payment for the first 36 months. c) Calculate the outstanding balance immediately after the 36th monthly payment.