Ava and Brady have been enjoying their home since they purchased it almost 5 years ago. They have provided you with a copy of their mortgage contract. The following are key details from their mortgage contract:

• Mortgage amount: 720,000
• Mortgage term: 5 years
• Mortgage amortization: 20 years
• Fixed closed mortgage, rate: 3.25%
• Payment schedule: monthly payments

They have been contacted by their financial institution regarding their mortgage renewal. Their financial institution is offering Ava and Brady a 3-year fixed closed mortgage at a rate of 3.75%.

Required:

1. Compute the balance outstanding after 5 years. (10 marks)
2. Compute the new mortgage monthly payment upon renewal. (6 marks)
3. How much interest will they pay during the new 3-year mortgage period? (8 marks)
4. To assist with their budgeting, Ava and Brady are considering changing to bi-weekly payments so the timing will be the same as their payroll deposits. Compute the new mortgage bi-weekly amount upon renewal. (6 marks)