b. The Kerwins are selling their home in order to assist in providing their input for...

  

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b. The Kerwins are selling their home in order to assist in providing their input for a house they have decided to purchase for $16,000,000. The sale agreement on the house being purchased requires a deposit of 20 percent plus closing costs of $800,000 to be paid on signing on August 31, 2018. The balance of the purchase price (second deposit) that is not being financed by mortgage loan is due on September 30, 2018, the date on which the sale is to be closed. Currently, the Kerwins have a mortgage balance of $2,000,000 on their old home, which has been appraised at $8,000,000. A purchaser has been identified but the proceeds from the sale of this property will not be received until December 30, 2018. The Kerwins have been pre-approved by Local Building Society to qualify for a 25-year mortgage of $11,000,00 on the new house. This will attract an interest rate of 5.50% per annum with monthly compounding. In the mean time RBNC Bank Ltd, a commercial bank, is offering a bridging loan at a rate of 8.50% per annum and the Kerwins will only use the minimum amount needed of this loan. The Kerwins also have savings of $250,000. a. How much cash must the Kerwins pay on signing the sale agreement for their new home? How much should they pay on the second deposit? C. How much equity does the Kerwins have in their old house? d. How much should they borrow if they take a bridge loan? (Bear in mind that they will only use the minimum needed) e. f. Use an amortisation table to show what the balance would be at the end of the first three months on the Kerwins new mortgage loan. If the Kerwins are planning to keep their new mortgage loan for fifteen years, what would be the total interest payable over the period? b. The Kerwins are selling their home in order to assist in providing their input for a house they have decided to purchase for $16,000,000. The sale agreement on the house being purchased requires a deposit of 20 percent plus closing costs of $800,000 to be paid on signing on August 31, 2018. The balance of the purchase price (second deposit) that is not being financed by mortgage loan is due on September 30, 2018, the date on which the sale is to be closed. Currently, the Kerwins have a mortgage balance of $2,000,000 on their old home, which has been appraised at $8,000,000. A purchaser has been identified but the proceeds from the sale of this property will not be received until December 30, 2018. The Kerwins have been pre-approved by Local Building Society to qualify for a 25-year mortgage of $11,000,00 on the new house. This will attract an interest rate of 5.50% per annum with monthly compounding. In the mean time RBNC Bank Ltd, a commercial bank, is offering a bridging loan at a rate of 8.50% per annum and the Kerwins will only use the minimum amount needed of this loan. The Kerwins also have savings of $250,000. a. How much cash must the Kerwins pay on signing the sale agreement for their new home? How much should they pay on the second deposit? C. How much equity does the Kerwins have in their old house? d. How much should they borrow if they take a bridge loan? (Bear in mind that they will only use the minimum needed) e. f. Use an amortisation table to show what the balance would be at the end of the first three months on the Kerwins new mortgage loan. If the Kerwins are planning to keep their new mortgage loan for fifteen years, what would be the total interest payable over the period?