What is your advice

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Question: A friend is seeking your advice on interest rate risk in housing loan. She is thinking to buy a $2 million condominium and a bank offers to finance 75% of the cost using a housing loan term that is pegged to 1% above SORA rate. The current SORA rate is 2% and she has 25 years to pay off the housing loan. The first payment is due upon the approval of the loan (meaning it is an annuity due). She wants to find out from you what would be the difference in the monthly payment if the SORA rate was 3% instead. What is your advice?

Reference no: EM133559807

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