ion. This property has been appraised at 8.5 million and is now up for sale at its current market value. A purchaser has been identified but the proceeds From the sale is not due to be paid to the Lyns until November 30, 2020. In the meantime the Lyn have contracted to purchase a new home at Wex Haven for $17 million, although this property is valued at only $16 million
The Lyns lives in their own home at 40 Calvin Ave, on which they have a mortgage balance of $2 million. This property has been appraised at 8.5 million and is now up for sale at its current market value. A purchaser has been identified but the proceeds From the sale is not due to be paid to the Lyns until November 30, 2020.
In the meantime the Lyn have contracted to purchase a new home at Wex Haven for $17 million, although this property is valued at only $16 million. The sale agreement on this property requires a deposit of 20% on signing which will take place on June 1, 2020, With the balance which will not be covered by a mortgage, payable in 30 days after signing.
Based on their high salaries, North Caribbean Building Society have pre approved the Lyn for a 25 year mortgage of 75% of purchase price or value, whichever is less, up to a maximum of $20 million. This will attract an interest rate of 5.50% per annum with monthly compounding and will be disbursed on September 30, 2022.
New World Bank Limited, a commercial bank, is offering a bridging Loan of up to 17 million for 120 days at an interest rate of 8.50% per annum and the Lyn will only use the minimum amount needed of this loan.
A closing cost of 450,000, which must be paid on signing of the sale agreement, will be associated with purchase of the new home. The Lyn also have savings of 1,450,000 which will be available for use in their new home transaction. Final payment for the new property, position of both properties and disbursement of the bridging loan will take place on August 1, 2020.
The Lyns also have a bond with a face value of $10 million that will mature on September 29, 2030.
(A) How much cash must the Lyns pay on signing the sale agreement for their new home?
(b) how much of the purchase price will be financed by the long-term mortgage?
C). How much should they pay on the second deposit?
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