With the arrival of their twins, a young couple would like to sell the house where they lived and buy a bigger house. Following several visits to the properties available on the real estate market, they choose to buy a house that costs $425,000. They must however borrow 80% of the purchase cost of the property. They sign the loan agreement with their bank knowing that the interest rate offered is 5.5% and the duration of mortgage repayment is 25 years.

a. What will their monthly repayment amount be?

b. What will their loan balance be after 12 years?

Answer rating: 100% (QA)

To calculate the monthly repayment amount and the loan balance after 12 years we can use the formula ... View the full answer