John borrowed $300,000 from a bank for buying an apartment three years ago. He has been paying the monthlymortgage repayments(at month end)with anannualfixedinterestrateof6% for three years, and themortgagehassevenyearsremainingterm.Sincetheinflationhasrevertedbacktothelong-termtarget, theReserveBankdecidedtopausehikingthebenchmarkcashrate.Assuch,majorcommercialbanksstarted to offer special deals to attract new customers. John is considering two deals listed below.

• Bank BNZ: a 10-year mortgage with a fixed interest rate of 5.4% p.a. The monthly mortgage repaymentsneedtobemadeattheendofthemonth.Abonusof$5,000isofferedtocustomersfor transferring an existing mortgage from another bank. (Hint: the bonus can be used to reduce the mortgage balance)
• Bank DBA: a 7-year mortgage with a fixed interest rate of 6.2% p.a. The quarterly mortgage repaymentsneedtobemadeatthebeginningofthequarter(thefirstrepaymentisduenow).Abonusof$4,000isofferedtocustomersfortransferringanexistingmortgagefromanotherbank.

Workingasanindependentfinancialplanner,youareinvitedtoprovideadviceaboutthemortgagedecision.Inparticular, please advise the following

1. Fortheexistingmortgage,whatisthemonthlymortgagepayment?Whatstheremainingbalance?

1. WhatwillbethemonthlymortgagerepaymentifJohnswitchestoBankBNZ?Pleaseconstructaloan amortizationtabletodemonstratethemortgageaccountbalanceoverthetermofthemortgage.

1. WhatwillbethequarterlymortgagerepaymentifJohnswitchestoBankDBA?Pleaseconstructaloan amortizationtabletodemonstratethemortgageaccountbalanceoverthetermofthemortgage.

1. PleaseadviseifshouldJohnstaywiththecurrentmortgageorswitchtoanewbank.Ifswitching,whichbank should John move to? Please justify the reasons.(Hint: considerations should include: total interestpaymentsandimpactsofmortgagerepaymentonlivingstandard)