Mortgage

Fixed Rate Mortgages

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What ideas do you get from the words

Fixed,

Rate and

Mortgages?

A fixed rate mortgage is...

a loan to finance the purchase of real estate, usually with specified payment periods and a fixed interest rate.

The borrower (mortgagor) gives the lender (mortgagee) a right of ownership on the property as collateral for the loan.

Question 1

Tim bought a house for 250,000. He makes a down payment of 15% of the purchase price and takes a 30-year mortgage for the balance. He pays $1500 monthly. Calculate

(i) the down payment

(ii) the total mortgage to be paid after the 30 years.

Let's determine the steps

• Look at the video to solve the problem: Tim bought a house for 250,000. He makes a down payment of 15% of the purchase price and takes a 30-year mortgage for the balance. He pays $1500 monthly. Calculate

  (i) the down payment

  (ii) the total mortgage to be paid after the 30 years.

• Step 1: ?

• Step 2:?

• Step 3:? ....

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What are the steps you derived?

Steps to calculating Fixed Rate Mortgage

• 1. Read the question

• 2. Write important information such as the fixed interest rate, the marked price of the house, the down payment, monthly instalments, time period

• 3.a Write down the downpayment in cash if given if not complete step 3b

• 3b. Convert the downpayment from a percentage of the marked price to cash.

• 4. Calculate the number of payments for the time period.

• 5. Multiply the number of payments by the cost of each instalment

• 6. Add step 5 to the downpayment to determine the amount paid after the 30 years.