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Compute the new mortgage monthly payment upon renewal

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Question - Mortgage Calculations

Ava and Brady have been enjoying their home since they purchased it almost 5 years ago. They have provided you with a copy of their mortgage contract. The following are key details from their mortgage contract:

Mortgage amount: 720,000

Mortgage term: 5 years

Mortgage amortization: 20 years

Fixed closed mortgage, rate: 3.25%

Payment schedule: monthly payments

They have been contacted by their financial institution regarding their mortgage renewal. Their financial institution is offering Ava and Brady a 3-year fixed closed mortgage at a rate of 3.75%.

a) Compute the balance outstanding after 5 years.

b) Compute the new mortgage monthly payment upon renewal.

c) How much interest will they pay during the new 3-year mortgage period?

d) To assist with their budgeting, Ava and Brady are considering changing to bi-weekly payments so the timing will be the same as their payroll deposits. Compute the new mortgage bi-weekly amount upon renewal.

Reference no: EM132842700

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