FIN111 - Mortgages and Home Loans in Australia Assignment

Assignment Task

Summary

Part

1. Mortgage products

• Research the home mortgage industry in Australia and obtain the latest data (lending rate and fees) from the financial institution’s website.
• Compare products (such as a basic home loan, one with offset account, variable and/or fixed lending rate, etc) from 3 different financial institutions.
• Choose the best one for this assignment. Explain why you chose that financial institution and its product (in terms of interest rate and fees).

2. Calculations

Use the first six digits of your student number as the actual amount borrowed, and the interest rate that you have selected to calculate the following:

1. Initial fortnightly payment of a 25-year mortgage using the PVA formula.

2. Fortnightly payment in Years 6 - 10 if the interest rate is increased by 1.5?ter 5 years using the PVA formula.

3. Fortnightly payment from Years 11 - 15 if the interest rate is further increased by 0.6?ter 10 years using the PVA formula.

4. Fortnightly payment from Years 16 – 25 if the interest rate is further increased by 1.2?ter 15 years using the PVA formula.

5. Effective annual interest rate for each period: Year 1-5, Year 6-10, Year 11- 15, and Year 16-25 using the EAR formula.

6. Average Effective annual interest rate of this 25-year mortgage.

3. Extra payments and Reflection

• From Year 20 onwards, you make extra payments on top of the normal repayments. Use the last digit of your student number as the extra hundred(s) of dollars repayment. (If your student number ends with zero (0), use $100 as the extra payment). E.g. Student no. 5151515 – the extra payment per fortnight will be $500
• Explain how the extra fortnightly repayment (from year 20 onwards) affects the term of the mortgage.

This FIN111 – Accounting and Finance has been solved by our PHD Experts at My Uni Paper.