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Mr. Lai bought an apartment three years ago. The purchase price was $5,000,000. He borrowed...

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Finance

Mr. Lai bought an apartment three years ago. The purchase price was $5,000,000. He borrowed 60% of the purchase price through a mortgage from his bank. The interest rate of the mortgage was 6% p.a. The mortgage was to be repaid monthly for 18 years. He was not allowed to make early repayment of the principal in the first three years. After the first three years he is allowed to make any early repayment as he likes. The bank manager told Mr. Lai that the mortgage interest rate has been revised to 4.8% p.a. starting today.

  1. Calculate the total amount of interest Mr. Lai has paid in the third year.

  1. Since Mr. Lai has an option to make early repayment of the principal to the bank now, he decides to make an early repayment of $200,000 principal today.

  1. After repaying the $200,000 today, in how many more months will the mortgage be paid off if he wants to keep the original repayment amount?

  1. After repaying the $200,000 today, what is his new monthly payment if he wants to keep the original repayment period?

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