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Part 1 - BAIL TVM Calculations A $150,000 mortgage is amortized by monthly payments over 25 years. It is renewable after five years. Interest is 5.0% compounded semi-annually (like It always is in Canada) a) How much is the monthly payment? b) How much interest is paid in the first six months? c) Construct a partial amortization schedule for the first 4 months of payments Canadian Mortgages (con't) Amount Paid 0 Interest Paid 0 618.59 Principal Paid 0 O/S Balance $150,000 Period 0 1 2. 3 149491.31 255.92 615.43 4 d) How much principal is paid in the first year? e) How much interest will be pald over the life of the mortgage (assuming that the rate is 5.0% each time you renew the mortgage) 1) What would your payments be if after 5 years the renewal rate jumped to 8%? Part 2 (complete the chart below) 25 year amortization 15 year amortization N/A $150,000 mtge, 5% 35 year amortization interest Monthly payments Difference in monthly payments compared to the monthly payment required for a 15 year amortization Total Interest Paid over the life of the mortgage Difference in total Interest paid over the life of the mortgage compared to a 15 year N/A amortization Total Principal paid over the life of the mortgage (hint: they are all the same) g. In summary: If you can afford a little bit higher monthly payment - does it save you TONS of money over the long run

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