+89 3. A couple save for a house deposit and then take out a mortgage to buy the house as follows.
(a) They save e 750 per month for 8 years at an annual rate of interest of 2%, credited monthly. How much do they have at the end of 8 years?
(b) They then take out a 50 year mortgage to buy the house, and can afford e 700 per month. If the annual rate of interest on the mortgage is 2%, debited monthly, how much can they borrow?
(c) (i) How much can they afford to pay for their house, including the deposit saved?
(ii) How much net interest will they pay over the 50 year period?
(a) They save e 750 per month for 8 years at an annual rate of interest of 2%, credited monthly. How much do they have at the end of 8 years?
(b) They then take out a 50 year mortgage to buy the house, and can afford e 700 per month. If the annual rate of interest on the mortgage is 2%, debited monthly, how much can they borrow?
(c) (i) How much can they afford to pay for their house, including the deposit saved?
(ii) How much net interest will they pay over the 50 year period?
ANSWERS:
a) The couple will have saved a total of =78,009.56 Euros in 8 years.
b) The couple can borrow up to =265,361.97 Euros.
c) - (i) Since they can borrow the amount in b), they can afford a house worth: 265,361.97 + 78,009.56=343,371.53 Euros.
(ii) The couple will pay a total of =154,638.03 Euros in interest over the 50-year period.
