You are thinking of buying a house in 3 years time and price of houses that...

 

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You are thinking of buying a house in 3 years time and price of houses that you can afford then will be approximately $600,000. The bank will lend you 80% of the price. This is called the LVR (Loan to Value Ratio). The remainder will be a deposit that you will have to contribute out of your own equity. To save up for the deposit, you can invest a lump sum now into a 3 year term deposit which calculates and pays interest monthly at 4% p.a. How much will you have to invest now to accumulate a sufficient deposit in 3 years time? You are thinking of buying a house in 3 years time and price of houses that you can afford then will be approximately $600,000. The bank will lend you 80% of the price. This is called the LVR (Loan to Value Ratio). The remainder will be a deposit that you will have to contribute out of your own equity. To save up for the deposit, you can invest a lump sum now into a 3 year term deposit which calculates and pays interest monthly at 4% p.a. How much will you have to invest now to accumulate a sufficient deposit in 3 years time?

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