Question $22(10$ marks$)$

The Harveys are purchasing a home for $$12,500,000$ and have made the required deposit of $12\%$ and

have also paid the closing cost of $$1,000,000.$ They have been pre$-$approved by the Local Building

Society to qualify for a $25-$year mortgage loan for the balance to close the purchase. This will attract

an interest rate of $5\mathrm{.}50\%$ per annum with monthly compounding.

a$)$ Use a full amortisation table to show what the loan balance would be at the end of the first three

months on the Harveys' new mortgage loan.

$(5$ marks$)$

b$)$ If the Harveys are planning to make only the required monthly payments on the loan and then use

a lumpsum deposit to pay off their mortgage at the end fifteen years, what would be the total

interest payable over the period?

$(5$ marks$)$