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The mortgage on your house is five years old. It required monthly payments of SEK 12,000, had an original term of 30 years, and had an interest rate of 6.0% (APR). In the intervening five years, interest rates have fallen and so you have decided to refinance - that is, you will roll over the outstanding balance into a new mortgage. The new mortgage has a 30-year term, requires monthly payments, and has an interest rate of 3.0% (APR).

a) What monthly repayments will be required with the new loan?

The new monthly payments will be SEK . .....(round to full SEK)

(b) If you still want to pay off the mortgage in 25 years, what monthly payment should you make after you refinance?

The monthly payments will be in this case SEK..... . (round to full SEK)

(c) Suppose you are willing to continue making monthly payments of SEK 12,000. How long will it take you to pay off the mortgage after refinancing?

Paying off the mortgage will take months (round to full months)

(d) Suppose you are willing to continue making monthly payments of SEK 12,000, and want to pay off the mortgage in 25 years. How much additional cash can you borrow today as part of the refinancing?

Additional cash that you can borrow is SEK . (round to full SEK)

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92427619

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