QUESTION $2($Home loans$)$

$2\mathrm{.}1$ Table $1$ below is a loan factor table that shows the monthly repayments per $R1000$ on a home loan with interest rates ranging from $9,75\%$ to $11,25\%$ per annum, over $15,20,25$ or $30$ years. Magda is planning on buying a house and she has a disposable income of R$18570$ per month. The National Credit Act $($NCA$)$stipulates that the home loan amount that a person qualifies for should be calculated based on the disposable income.

Table $1$: Loan factor table for calculating monthly repayments on a

home loan per R$1000$

$\backslash$table$[[$Interest $\%,$Years$],[,15,20,25,30],[9\mathrm{.}75\%,10\mathrm{.}59,9\mathrm{.}49,8\mathrm{.}91,8\mathrm{.}59],[10\mathrm{.}00\%,10\mathrm{.}75,9\mathrm{.}65,9\mathrm{.}09,8\mathrm{.}78],[10\mathrm{.}25\%,10\mathrm{.}90,9\mathrm{.}82,9\mathrm{.}26,8\mathrm{.}96],[10\mathrm{.}50\%,11\mathrm{.}05,9\mathrm{.}98,9\mathrm{.}44,9\mathrm{.}15],[10\mathrm{.}75\%,11\mathrm{.}21,10\mathrm{.}15,9\mathrm{.}62,9\mathrm{.}33],[11\mathrm{.}00\%,11\mathrm{.}3$

Loan information

Deposit: $8\%$

Interest rate: Prime $+2\%$

Loan period $20$ years

$($Assume the prime rate is $9\%)$

$2\mathrm{.}2\mathrm{.}1$ Calculate the real cost of the house with the given information above. Make use of the factor table in question $2\mathrm{.}1$ where factor values are needed. You may use the following formula to guide you in your calculations.

Deposit

Loan amount$=$ house price $-$ deposit

Monthly repayments $=$ interest rate $=$ prime $+2\%($get factor for interest from factor table above

Loan length $20$ years

Repayment $=$ loan amount $1000x$ factor

Real cost $=$ Monthly repayment amount $x$ number of repayments made.

$(7)$

$2\mathrm{.}2\mathrm{.}2$ If the buyer had to pay a $15\%$ deposit instead of $8\%$ what effect would this have on the real cost of the loan? $($Show all calculations and remember to state the effect on real

$(6)$

cost of loan.$)$