Jim and Jane, both aged 33, are married with their 5-year-old son, Johnny.

Jim is a Sole-Proprietor (SEP) running an Events Company. Due to the COVID-19 pandemic, his annual income has taken a significant hit over the last 2 years. Currently, his average annual Net Trade Income is estimated to be $80,000. With the economy moving into the endemic phase, he is expecting business to pick up while at the same time, keeping his fingers crossed that another COVID-19 Variant will not further affect his livelihood.

Jane works as a childcare teacher earning a monthly income of $3,000. She has a contractual annual bonus of 3 months in her employment contract.

The family is currently living in a 3-room HDB flat in Yishun. They bought it when they first got married 6 years ago and have taken a HDB loan of $300,000 over a 25-year loan tenure. All along, the couple has been servicing the HDB loan using cash. This is because Jim does not contribute to his own CPF account as a SEP, while Jane has not been working until recently.

Jim drives a Toyota MPV which he bought for $80,000 2 years ago. To finance the purchase, he took a car loan of $60,000 at a flat-rate interest of 2% over a 7-year tenure.

As the couple have plans to have another child, they are thinking about upgrading their HDB flat to a 2-bedroom Private Condominium near Farrer Park MRT Station. The Condominium is estimated to cost $1m. It looks like a significant investment, but the couple felt that they can tighten their belts in order to provide the family with a better living environment, and fulfil their aspiration of being a real-estate owner. Currently, the most competitive mortgage package is from ABC Bank at an interest rate of 1.5%.

To finance the purchase, they intend to sell the HDB flat now and buy the new property, while staying with Jims parents until the new property is ready. Currently, based on resale data from HDB, the most recent transaction in his vicinity was a unit beside his block, sold for $450,000. This unit was located at the 11th storey while the couple is staying on the 5th floor. The couple is confident that the flat could be sold for the same price within 6 months based on the exceeding demand for properties in that location. After all, their flat has been nicely renovated and is in excellent move-in condition. The couple does not intend to borrow beyond age 65.

As a beginner investor, Jim bought a China tech stock in 2019 and was making good gains. However, recently, due regulatory changes imposed by the Chinese Government on the tech industry, the stock crashed significantly, and he is now deep in losses. He had lost all hopes of a rebound and wanted to liquidate his position and redeploy the funds to other investments. His other investment was his ILP fund portfolio which he made an overall annualised gain of 4.7% over the last 5 years by tracking the S&P500 Index.

You had an initial meeting with them on 31st July 2022 and gathered the following information as of that date:

Combined Assets
Description	Market Value
Current Account	$55,000
Insurance Cash Value (ILP)	$30,000
Stocks Portfolio	$27,000
HDB Flat	$400,000
Family Car	$50,000
Heirloom (Jade Pendant)	$12,000
Luxury Watch (Rolex GMT Master 1994)	$28,000

Combined Expenses
Description	Annual Amount
Credit Card Spending (Misc. Expenses)	$18,000
Home-related expenses	$800
Utilities, Internet & TV Subscriptions	$3,000
Telecommunication	$1,800
Dining Out	$24,000
Personal Grooming (Combined)	$12,000
Transport and car-related expenses	$9,000
Recreation & Entertainment	$14,500
Domestic Helper (Part-time)	$2,500
Insurance Premium	$6,000

(a) Determine the mortgage outstanding on their HDB Flat.