You are interested in buying a new house in Berlin. The price of the house is...
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You are interested in buying a new house in Berlin. The price of the house is 1.2 million Euros. The interest rate on the mortgage is 0.8% per year, the length of the loan is 30 years, and the bank asks for a minimum of 20% down payment. Your current monthly salary is 8,000 Euros per month. However, the bank will only provide the loan if the monthly payments do not exceed 35% of your monthly salary. a. What is the monthly payment of this loan? Will you be able to afford this loan? (8 points) b. The bank tells you to increase the down payment in order to reduce the monthly to 35% of your salary. payments How much do you have to increase the down payment such that you can afford this loan? (8 points) c. How much interest will you have paid at the end of the maturity. (5 points) d. After 10 years, you receive an inheritance and would like to repay your loan. How much money do you need to pay to the bank at that point to fully retire the mortgage? (7 points) You are interested in buying a new house in Berlin. The price of the house is 1.2 million Euros. The interest rate on the mortgage is 0.8% per year, the length of the loan is 30 years, and the bank asks for a minimum of 20% down payment. Your current monthly salary is 8,000 Euros per month. However, the bank will only provide the loan if the monthly payments do not exceed 35% of your monthly salary. a. What is the monthly payment of this loan? Will you be able to afford this loan? (8 points) b. The bank tells you to increase the down payment in order to reduce the monthly to 35% of your salary. payments How much do you have to increase the down payment such that you can afford this loan? (8 points) c. How much interest will you have paid at the end of the maturity. (5 points) d. After 10 years, you receive an inheritance and would like to repay your loan. How much money do you need to pay to the bank at that point to fully retire the mortgage? (7 points)
Expert Answer:
Answer rating: 100% (QA)
a To calculate the monthly payment of the loan we need to determine the loan amount and the interest rate The loan amount is the purchase price minus the down payment In this case the down payment sho... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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