What is the maximum monthly mortgage payment

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Question - Your parents want to buy a condo in Vancouver. Banks use the affordability rule: no more than 32% of gross 50% monthly household income can go towards paying the mortgage, property taxes, heating costs and of the condo fees. Their gross income is $10,000 per month, property taxes are $3,000/year, heating costs average $50/month and condo fees $400/month.

What is the maximum monthly mortgage payment they could afford? 

Under the Bank of Canada posted rate of j2 = 4.94%, how large of a mortgage would they qualify for if it is amortized over 25 years and paid monthly?  Express your answer as a whole number.

Reference no: EM132920699

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