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Discuss the key value drivers of your real switching option

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Question - You are contemplating buying a 3-bedroom apartment in Richmond. The property is on the market for £800,000. You currently live in a one-bedroom flat near London Waterloo Station. You own 40% of the flat and have been repaying a mortgage on this property for the past 10 years. The current market value of the one-bedroom flat is £550,000. The down payment for the Richmond apartment is 15% of market value but you only have £90,000 in your bank account. Discuss examples of switching real options mechanisms that will enable you to secure a mortgage on the Richmond apartment and move to Richmond, while still repaying your other mortgage on the Waterloo flat. Discuss the key value drivers of your real switching option.

Reference no: EM133028614

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