A Demand (Variable Rate) Mortgage of $137 000

question 34

Essay

A demand (variable rate) mortgage of $137 000.00 is amortized over 20 years by equal monthly payments. After 21 months the original interest rate of 6% p.a was raised to 6.6% p.a. Three years after the mortgage was taken out, it was renewed at the request for the mortgagor for a five-year term at a fixed rate of 7.25% p.a.
a) Calculate the mortgage balance after 21 months.
b) Compute the size of the new monthly payment at the 6.6% rate of interest.
c) Determine the mortgage balance at the end of the five-year term.

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