A property that was valued at $950,000 three years ago is being held as security for a loan. The banks policy is to lend at a loan-to-value ratio (LVR) of no more than 75%. If the current loan outstanding is $650,000 and a recession occurs reducing the value of the property to $810,000.

Required

i) How much money is the borrower required to pay to remain compliant with the banks policy? (4 Marks)

ii) If the bank prefers to accept additional collateral security instead of a payment what is the minimum value of the additional security that the borrower must present to the bank to remain compliant with the banks policy? (4 marks)