Eight years ago, Jacqueline de Santos purchased a brand new condo at the Toronto Harbourfront for

$580,000. Jacqueline had been saving for her first home purchase ever since she graduated from UTSC and she was able to make the 20% required down payment in order to avoid mortgage insurance. At the time, the mortgage rate on a 10year fixed rate mortgage was 7.120% (compounded annually,all APRs are compounded annually in this question) and the rate on a 25year fixed rate mortgage was 9.240%. Jacqueline decided to take on a 25year fixed rate mortgage.

Today, Jacqueline works at RBC as a marketing manager. A couple of weeks ago during lunch, she was having a conversation with some of her colleagues at the mortgage department. Mortgage rates had fallen and she was advised to see whether she could refinance her mortgage in order to save some money. Normally, the penalty for refinancing a mortgage equals the amount of interest paid over the past three months. However, as an RBC employee, Jacqueline does not have to pay the penalty. One of her colleagues sent her the following information about current mortgage rates at RBC

:

1) Calculate Jacquelines monthly mortgage payment prior to refinancing.

2) How much has Jacqueline paid towards her condo over the past eight years?

3) If Jacqueline would have increased her mortgage payment calculated in question 1 by $50 a month

since the start of the mortgage, what would the current mortgage balance be?

4) Under the assumption of question 3 regarding the monthly payment, calculate the number of years it would take Jacqueline (as of today) to pay off her existing mortgage.

5) Should Jacqueline follow her colleagues advice and refinance her mortgage for a 10year fixed rate mortgage?

3-YR Fixed 5-YR Fixed 10-YR Fixed 2.19% 2.22% 5.80% inquire inquire inquire Compare all rates Compare all rates Compare all rates 3-YR Fixed 5-YR Fixed 10-YR Fixed 2.19% 2.22% 5.80% inquire inquire inquire Compare all rates Compare all rates Compare all rates