Question 2 (25 marks) topic 2-3
Jason and Susan are planning to get married. In case of this, Jason wanted to purchase a house priced at $5 million. He planned to borrow 80% of the total amount through mortgage loan provided by Bank A. The annual interest rate charged by Bank A was Prime rate minus 2% and he had to pay off the loan in 25 years. The first payment will be made one month after the purchase. REQUIRED:
(a)	What was the monthly payment of Jason on the mortgage if the Prime rate offered by Bank A was 6%?	(5 marks)
(b)	Under the internal stress-test policy of Bank A, the bank is not allowed to lend money to customer if the monthly payment is more than 25% of the monthly income of the customer. Suppose Jasons monthly income is $70,000. Is he eligible to get the mortgage loan from the bank? If not, what can he do in order to obtain the loan from the bank successfully? Suggest TWO ways with explanations.	(5 marks)
(c)	Assume that after 10 years, Jason would like to change the mortgage from Bank A to Bank B which will charge him annual interest rate which would be fixed at 5% for the loan period of 20 years. What will be the new monthly payment that he needs to repay to Bank B?	(10 marks)
(d)	Please advise with explanations whether Jason should change the mortgage from Bank A to Bank B? compare part a and part c?	(5 marks)