Hector has qualified for a $450,000 mortgage. The mortgage is to be repaid with monthly payments over a 25-year period.

a. What is the minimum down payment he will be required to provide in Canada?

b. If Hector makes the minimum required down payment, how large will his monthly payments be given the bank has offered him a fixed rate of 3.50% compounded semi-annually over the 25 years?

c. If Hector increases his initial down payment to 10% of the purchase price, by how much will his payments change?

d. Approximately how much money can he save over the 25-year amortization period by increasing his down payment from the minimum to 10% assuming the rate does not change?

AppendixLO1