You want to buy a property valued at $1,200,000 and have arranged with the PB Bank for a 30 year mortgage equal to 90% of the sale price. The agreement calls for monthly repayments and the bank will charge 6% pa interest compounded monthly.

  1. If your first monthly payment is due one month after the loan is received, calculate the amount for your regular monthly payments. (Show answer correct to the nearer cent)
  2. After 5years (that is after the 60th payment) you want to refinance your mortgage with RH Bank. Assuming no exit fees, calculate the payout amount that is, the amount you have to pay PB bank to payout your mortgage. (Show answer correct to the nearer cent)
  3. The RH Bank is charging 5% pa interest compounded monthly. If you refinance your loan with RH bank calculate what will be your new monthly payments. (Show answer correct to the nearer cent)
  4. If you decide to pay RH Bank the same monthly repayments that you were paying PB Bank, how long will it take you to payout the mortgage with RH Bank? (Show answer correct to four decimal points)

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