Securing a Mortgage

Claude and Mike are a young couple of working professionals living in Thunder Bay, Ontario. Together, they have a combined gross monthly income of $5,700. They currently pay $260 per month towards a lease on their car and Claude makes a payment of $180 per month towards her school debt. They have also developed a high credit score, by keeping their credit card balances low and paying off all bills and debts on time.

Claude and Mike have been putting money aside from each of their paycheques to save up for a down payment of 20% on a $190,000 condo. Once they saved up enough money, they began researching different mortgage options online.

Through their research, Claude and Mike discovered that in addition to big banks, there are mortgage brokers who can assist them with their mortgage. A mortgage broker will negotiate terms with multiple different potential lenders, and as such, can often find the lowest interest rate offered by a financial lending institution. In addition to this, a mortgage broker is paid commission by the lender, and therefore, the service would not be of cost to Claude and Mike.

Intrigued by this, the couple contacted a Canadian mortgage broker company, that has access to over 30 of the top mortgage lenders in Canada.

e. Instead of making monthly payments, the mortgage broker presented an option of accelerated bi-weekly payments, in which the couple must make a payment of half the amount calculated in (d) every two weeks. Claude and Mike opted for the accelerated bi-weekly payment schedule. By how many weeks did they shorten their amortization period?

_________weeks

Round up to the next payment and week.

f. Construct a partial mortgage schedule the mortgage broker can present to the couple, showing:

1. the first two payments of the first term,
2. the last two payments of the first term,
3. the first two payments of the second term,
4. the last two payments of the second term, and,
5. the total payment made and interest paid.

Payment Number	Amount Paid (Periodic Payment) PMT ($)	Interest Portion (Previous Balance i ) INT ($)	Principal Portion (PMT - INT) PRN ($)	Principal Balance (Previous Balance - PRN) BAL ($)
0	-	-	-
1
2
...
58
59
60
61
62
...
				$0.00
Total