Imagine you have an interest-only 10-year loan for £100,000 with an interest rate of 8%.  After 2 years, Now, consider the opportunity to refinance the loan with a lower interest rate 8-year loan, with annual interest rate 5%.

Assumption: We assume the 8% loan allows prepaying at anytime. We assume that there is no cost to prepayments.

Requirements:

 Calculate the loan amortisation for the old loan

If you borrow £85,641.87at 5% interest rate for 8 years, how much would you gain from this financing strategy?

Answer rating: 100% (QA)

Old loan amortization Principal 100000 Interest rate 8 Loan term 10 years Monthly payment Principal ... View the full answer