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AFF 210 ASSIGNMENT ONE WINTER 2018 You are planning to buy a 4-bedroom house in Hamilton that has a price of $1,000,000. One of the local banks has offered you a mortgage at a quoted rate 6% per year. Interest will be compounded semi-annually. The bank has indicated that they will require 30% down payment. The bank is prepared to lend you the remainder of the purchase price of the house. The amortization period will be 25 years and the term of the mortgage will be 5 years. You are going to make biweekly payments on your mortgage. The payments will be made at the end of each period. You have heard from your friend who has just completed AFF210, that by making additional payments on your mortgage during the initial term, you can reduce the remaining balance at the end of the initial term. Your friend has shown you a sample amortization schedule template (below). Sample Mortgage Schedule PAYMENT PRINCIPAL AMOUNT OF AMOUNT AT THE INTEREST COMPONENT OF PRINCIPAL COMPONENT OF PRINCIPAL AMOUNT AT END NUMBER (PERIOD) Prepare a mortgage amortization schedule to illustrate how the mortgage will be repaid over the next 25 years and calculate the following: i. What is the amount of your periodic payment? ii. How much will you pay in total on your mortgage over the life of your mortgage? ili. What is total interest that will be paid over the life of your mortgage? iv. How much principal will you have paid off during the initial term of your mortgage? v. Use the amortization table to determine the first payment where the interest portion of the a) payment is less than 50% of the total payment. Identify the payment number where this b) Print the amortization schedule separately using the following instructions: Do NOT print the entire mortgage schedule. Hide the rows in berween and print ONLY the first 10 rows and the last 10 rows of the mortgage schedule Assuming that you decide to make an additional biweckly payment of $100 during the initial term of your mortgage, how much less do you owe to the bank after 5 years? c) 80

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