a) why they have been paying the same sum every month, when they are sure that the amount of money they owe the Building Society has been going down; b) what that monthly sum is; c) how much they still owe the Building Society after 60 monthly payments; d) how much their new monthly repayments will be, if they take out a new mortgage, for the full amount which they currently owe, over a twenty-year period, with an interest rate of 5.5%.
Max and Minnie own their own home, subject to a mortgage in favour of the
Hemlington Building Society. They bought their house for £300,000 exactly five years
ago. They put down a deposit of £50,000 and financed the balance of the purchase
price with the mortgage. The term of the mortgage was 25 years, and the rate of
interest was fixed at 3.5%.
Max and Minnie have asked you to explain the following things to them:
a) why they have been paying the same sum every month, when they are sure
that the amount of money they owe the Building Society has been going
down;
b) what that monthly sum is;
c) how much they still owe the Building Society after 60 monthly payments;
d) how much their new monthly repayments will be, if they take out a new
mortgage, for the full amount which they currently owe, over a twenty-year
period, with an interest rate of 5.5%.
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