Claudette and Arash are a young couple of working professionals living in Thunder Bay, Ontario. Together, they have a

combined gross monthly income of $5500. They currently pay $280 per month towards a lease on their car and Claudette

makes a payment of $200 per month towards her school debt. They have also developed a high credit score, by keeping

their credit card balances low and paying off all bills and debts on time.

Claudette and Arash have been putting money aside from each of their paycheques to save up for a down payment of 20%

on a $200,000 condo. Once they saved up enough money, they began researching different mortgage options online.

Through their research, Claudette and Arash discovered that in addition to big banks, there are mortgage brokers who can

assist them with their mortgage. A mortgage broker will negotiate terms with multiple different potential lenders, and as

such, can often find the lowest interest rate offered by a financial lending institution. In addition to this, a mortgage broker

is paid commission by the lender, and therefore, the service would not be of cost to Claudette and Arash.

Intrigued by this, the couple contacted a Canadian mortgage broker company, that has access to over 30 of the top mortgage

lenders in Canada.

1a) What size of mortgage do the couple require?

1b) If the mortgage broker is able to secure them with a ten-year mortgage with a fixed rate of 2.44% compounded semi-

annually for a term of five years, what would be the size of their monthly payment?

1c) Claudette and Arash are informed that the utilities and taxes on their condo will be approximately $215 per month.

Assuming the mortgage terms outlined in (b), is it advisable for the lender to qualify the couple for their mortgage?

Explain your answer.