Question
Life Situation: Megan and Sean are looking for their first home in Ontario. They are in their late 20s and have been married for three
Life Situation: Megan and Sean are looking for their first home in Ontario. They are in their late 20s and have been married for three years. They still have a small amount left to pay towards their student and car loans. They do not have any children but plan to in the near future. Both Megan and Sean have steady stable jobs with good advancement opportunities. They are making housing savings. They do not want to use RRSP Home Buyers Plan for down payment.
| Combined Gross Annual Salary | $75,000 | After-tax salary | $60,000 |
Monthly Budget
| Rent | 800 |
| Food | 400 |
| Entertainment | 300 |
| Clothing/Laundry | 400 |
| Telephone/Cable/Internet | 200 |
| Car loan payment | 400 |
| Car expenses | 200 |
| Insurance life, car | 220 |
| Insurance - apartment | 30 |
| Household | 100 |
| Student loan payment | 300 |
| Personal expenses | 150 |
| Miscellaneous | 150 |
| Savings | 1,350* |
| Total | 5,000 |
* Savings - usually each month they contribute $100 to their emergency savings, $300 to their RRSPs and $950 to their house savings
Net Worth
| Assets | Liabilities | ||
|---|---|---|---|
| Chequing Account | 1,500 | Car | 6,000** |
| Emergency Savings | 6,000 | Student Loans | 8,000*** |
| Car | 14,000 | ||
| RRSPs | 15,000 | ||
| House Savings | 45,000 | ||
| Total Assests | 81,500 | Net Worth | 67,500 |
** They will be finished paying for the car loan in 16 months *** They will be finished paying for the student loans in 28 months
question 1
| Mortgage Type | 6 mos | 1 yr | 2 yr | 3 yr | 4 yr | 5 yr | 7 yr | 10 yr |
| Fixed rate - closed | NA | 3.2 | 2.9 | 3.7 | 4.3 | 4.9 | 6 | 6.19 |
| Fixed rate -open | 7.25 | 6.4 | NA | NA | NA | NA | NA | NA |
| Variable - closed | NA | NA | NA | 2.5 | NA | 2.5 | NA | NA |
| Variable - open | NA | NA | NA | NA | NA | 4.3 | NA | NA |
| Variable - capped | NA | NA | NA | NA | NA | NA | NA | NA |
Question 2
What mortgage type do you think Sean and Megan should get (closed vs. open; fixed vs. variable)? Why?
What term length would you suggest? Why? Note: you need to have a reason other than it is the only term available for the type of mortgage chosen above.
Assume that the mortgage will be obtained from CIBC. Please refer to question 1 and state the mortgage rate for Sean and Megan.
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Management Audit Approach In Writing Business History A Comparison With Kennedys Technique On Railroad History
Authors: Allen Bures
1st Edition
1138980277, 978-1138980273
