Dominic is in his 40s and lives in a two bedroom flat in Blackburn. He works at the local council. When he bought the flat in April 2019 the mortgage broker talked him through repayment and interest-only mortgages. He decided to use his savings as a deposit and chose a repayment mortgage, which by April 2021 was standing at 83,000. The market value of his flat had fallen by 2% over this time period on the original purchasing price of 95,000.

In April 2021 Dominic earns a net monthly income of 1,600 and his expenditure has averaged 1,500 a month over the last two years. In April 2021 a personal loan to conduct initial refurbishment on the flat is down from 1,500 to 800, but his current account balance has dropped to zero and he has an overdraft on his current account of 1,300. Meanwhile his savings account holds just 50. He now owes 1,800 on a credit card. His cash holdings have dropped to 30. The rest of his balance sheet has not changed since April 2019.

Dominic is now reviewing his finances.

Table 1 shows his balance sheet and financial ratios in April 2019. (Table is below)

• ?Using the information provided in Table 1, complete Dominic's balance sheet for April 2021.
• ?Explain the factors Dominic might have considered in choosing a repayment mortgage over an interest-only mortgage in 2019.
• ?Using the financial ratios and other relevant information, compare Dominic's financial situation in April 2019 and April 2021.
• ?Briefly explain two other possible actions Dominic could take to improve his financial situation.

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Table 1 Dominic's household balance sheet - April 2019 Assets (Total) Liquid assets Cash Current account Instant access savings account(s) Other liquid assets Other assets Home Liabilities (Total) Short-term liabilities Overdraft Credit card April 2019 96,400 1,400 100 1,000 300 0 95,000 95,000 86,750 250 0 250 50 Other short-term liabilities 0 Other liabilities Personal loans Mortgage Ratios Net worth / wealth Current asset ratio Leverage ratio 86,500 1,500 85,000 9,650 5.60 89.99