Reference no: EM132412260
Ian and Helen are considering whether or not to buy a particular property valued at $1,150,000. They have $350,000 of their own funds to commit towards the purchase and they expect to incur an additional $70,000 in fees and stamp duty on the purchase itself. They are able to borrow at an interest rate of 6.0% per annum with interest compounded monthly. Loan repayments would be monthly with the first payment due at the end of the first month after purchasing the property. The term of the home loan is 25 years. They both work full-time earning a combined after-tax salary of $16,400 per month
How much is the monthly mortgage payment Ian and Helen will be required to pay for their loan?
$
Will Ian and Helen face mortgage stress at current interest rates?
Loan affordability ratio: %(2 decimal places)
Ian and Helen (will or will not) experience mortgage stress
After 1 year, the bank informs Ian and Helen that $854513.66 is still owing on their loan. How much in total have Ian and Helen paid in mortgage payments during the first year?
$
How much of the amount repaid in the first year has gone towards reducing the principal amount borrowed?
$
How much interest have Ian and Helen paid in year 1?
$
If the bank now increases interest rates from 6% to 7.2%, what will Ian and Helen's new monthly mortgage repayments be?
$
How will this new monthly mortgage repayment affect their loan affordability ratio? That is, will they be facing mortgage stress?
Loan affordability ratio: %(2 decimal places)
Ian and Helen (will or will not) experience mortgage stress.