16. Cecilia and Matt finally find a house, which they really love. The asking price is $250,000 and last year's property tax bill was $2,340. They offer to purchase the house for $240,000, providing that they can arrange adequate financing. They have saved $45,000 for a down payment. Matt's gross annual salary is $42,000 while Cecilia's part-time salary is $18,000 annually. They have $25,000 in mutual funds, which they are willing to liquidate so that they have their required down payment. Their current debts include a car loan, which costs $360 monthly and an RRSP loan, which costs $340 a month. Matt and Cecilia do not like interest rate volatility and are considering a five-year mortgage with a fixed rate of 7.15% to be amortized over 25 years. Also, they have the option of making a repayment of $15,000 at the end of year 5 and at the end of year 10. (a) Will Cecilia and Matt be eligible for a conventional mortgage if their purchase offer is accepted by the vendor? (b) Assuming that they have the required down payment, will they qualify for a mortgage loan? (c) What is the monthly payment if they qualify for a mortgage loan? (d) How much interest will they pay over 25 years, assuming that interest rates remain the same and they make no repayments? (e) Compare the difference in total interest, and the effect on the time to repay the mortgage, if Cecilia and Matt make a repayment of $15,000 after five years? (f) How long will they take to repay the mortgage if they make a repayment of $15,000 at the end of year 5 and another repayment of $15,000 at the end of year 10?