Mr. Smith considered to purchase a townhouse in Vancouver area. Ms. Angel approached Mr. Smith as a real estate broker to help Mr. Smith to select, negotiate and purchase the property. Mr. Smith finally signed Purchase agreement for a townhouse in Fraser Valley area at the purchase cost of Cnd$1.2million just recently, the completion date will be 01October2021; Mr. Smith decided to go to Bank B for his mortgage, the mortgage brokerage manager Ms. Catherine greeted Mr. Smith and introduce him for the following mortgage information:

1. Bank B can offer the maximum loan amount (mortgage amount) capped at 6times of Mr. Smith taxable income 2020 ; or 65% of townhouse purchase price; in this case, Mr. Smith annual taxable income 2020 was cnd$100,000; the cap amount is negotiable.
2. The mortgage rate nominal is 2% per annum, and financial institution in Canada is allowed to quote the rate at semi-annual compounding;
3. The mortgage will be paid monthly;
4. Ms. Catherine offered Mr. Smith the amortization period of 20 years;

Smith is happy with the mortgage rate, which is low, and would like to give himself disposable cash flow more flexible.