Question
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
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.
Use the financial information given below and information you obtain from the Internet to answer the questions (1 9 below). Use the Case Study Answer Template to write up your answers.
Financial Information
| 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 (pet-caring, printer) | 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
Bank: CIBC Date:
| 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 |
Broker name: Date:
| Mortgage Type | 6 mos | 1 yr | 2 yr | 3 yr | 4 yr | 5 yr | 7 yr | 10 yr |
| Fixed rate - closed |
| 3.2 | 2.9 | 3.7 | 4.3 | 4.9 | 6 | 6.19 |
| Variable interest rate | NA | NA | NA | 2.5 | NA | 2.5 | NA | NA |
What term would you suggest? Why? What mortgage type do you think they should get (fixed vs variable; open vs closed? Why? Refer to Unit 05 files - Mortgage Financing Options for explanations.What source they should use for mortgage? Why?
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Selling Professional And Financial Services Handbook
Authors: Scott Paczosa, Chuck Peruchini
1st Edition
1118728149, 978-1118728147
