Every Canadian should understand how banks compute the payment on a conventional residential mortgage as this is the largest debt that most Canadians will ever take on.Assume that we want to borrow $375,000 at a rate of interest of 3.5%, compounded semi-annually and amortized over 25 years.

What is the effective annual interest rate on this mortgage?

What is the monthly payment for this mortgage?

What is the total amount of interest paid on this mortgage over its entire 25-year life?

How much interest will be paid during the 2nd year of the mortgage (payments 13 - 24)?