Linda and Matthew Pape are both graduates of MIT and they have been married for five years. They are currently interested in buying a house and a new vehicle. Matt works as a Physician in Vancouver and he earns $8,000.00 net per month after tax and deductions. Linda is a teacher at a local school where she earns $3,000 net per month after tax and deductions. Their combined gross salaries are $200,000 per year. They are looking at buying a house that is listed for $1,225,000 and that would be amortized over 25 years at an annual interest rate of 3.25%. There would be additional costs associated with the property including annual property taxes of $7,200, home insurance of $150 per month, and estimated monthly heat and hydro costs of $250 per month. There would also be additional closing costs associated with the property purchase including property transfer tax on the purchase value paid as a lump sum up front. They plan on making a 20% down payment on the purchase price of the property. The vehicle they are considering purchasing is a Honda CRV which is retailing for $42,650 including taxes, etc, and the dealer is offering zero down with interest at 4.0% for the duration of the loan which would be for seven years. This would be driven mainly by Matt and he would be responsible for the loan. Linda owns a 2018 Toyota Camry with a market value of $25,000. As far as assets and liabilities go Matt and Linda have RRSPs worth $100,000 and $60,000 respectively, and they also have a combined savings/chequing account worth $35,000. Matt has student loans of $100,000 that are being repaid at 5.5% over a 10 year term. Linda received a $100,000 inheritance and she has these funds sitting in a money market account. They each also have a CIBC Visa that carries an 17% interest rate and requires minimum payments of 3% per month. The balance on Matts card is $10,000 and Linda owes $5,000. They each have lines of credit where they could each borrow $30,000 at prime + 1% (interest only) if they needed to. Their personal possessions are worth approximately $50,000 each. They expect to spend $800 per month on food $400 per month on entertainment estimated auto insurance will cost $120 per month for Matt and $105 for the Linda estimated fuel costs of $300 each per month gym membership for Matt of $100 per month fitness classes for Linda of $150 per month Matt spends approximately $400 per month on lunches eating out they each spend $1,500 per year on gifts for friends and family they expect personal care (haircuts, grooming) to cost $150 per month clothing/dry-cleaning is expected to cost a total of $175 per month household cleaning supplies will cost $100 per month they also expect that they spend $200 per month each on miscellaneous items like coffee, newspapers, etc.

9. If the bank allowed for a TDS ratio of 28% what would be the maximum mortgage they would have qualified for?