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.

Based on the calculations, is it advisable for the lender to qualify the couple for their mortgage?

Yes

No

The couple accepted the mortgage terms, and made monthly payments for five years. At the end of the term, a new term of five years with a fixed rate of 2.08% compounded semi-anually was negotiated.

d. What is the new monthly payment that Claude and Mike must make? ___________Round to the nearest cent.