The RBC Royal Bank Offers an "Add-On Option" on Fixed-Rate

question 206

Short Answer

The RBC Royal Bank offers an "add-on option" on fixed-rate mortgages. The option allows the customer to borrow additional funds partway through the term of the mortgage. The interest rate charged on the combined mortgage debt becomes the weighted average of the old rate on the former balance and the current competitive rate on new mortgage financing. Suppose Herschel and Julie had a mortgage balance of $37,500 at 8%, when they borrowed another $20,000 at 7%. What interest rate will they be charged by the RBC Royal Bank on the new consolidated balance?

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Definitions:

Independent Variable

In experimental and observational studies, it's the variable that is manipulated or categorized to observe its effect on the dependent variable.

Standard Error of the Estimate

A measure that indicates the accuracy with which a regression line represents the data points.

Simple Linear Regression

An analytical technique that fits a linear equation to data points to model how a dependent variable changes with one independent variable.

Variation

Variation refers to the differences or deviations among individuals or objects in a particular characteristic, within a population, species, or set of data.