Stephen has been working in the current employer as an HR manager for more than 6 years. His annual gross income and annual take-home pay are $480,000 and $440,000 respectively. He doesn't have any other outstanding debts and spends $18,000 monthly on living expenses. Stephen is currently renting a one-bedroom apartment at Tai Po at a monthly rent of $12,500. Last month, he inherited $3 million from his grandfather. Thus, he is considering to use this amount of money as down payment for buying his first apartment for self-use. Below are the latest countercyclical measures for all self-use residential properties: - The loan to value ratio (LTV) is 80%. - The maximum debt-servicing ratio (DSR) is 55%, and its corresponding stressed-DSR is 65% (assuming an increase of the mortgage rate by 230 basis points in the stress test). Stephen is now considering the following mortgage plan provided by Royal Bank: Mortgage rate: H+1%, cap at P3.1%. Currently, the HIBOR is 2.8% and the Prime rate is 5.375%. Term of mortgage: Monthly payment and repayable in 30 years. (a) List any TWO advantages of buying an apartment. (4 marks) (b) Determine the mortgage rate offered by the Royal Bank. Briefly explain your workings. (3 marks) (c) Based on the latest countercyclical measures mentioned above, calculate the maximum loan amount Stephen can borrow. Briefly explain. In your working, you are REQUIRED to show the different loan amounts using the cap of LTV ratio, DSR and stress-DSR respectively. (12 marks) (d) Based on your answer in part (c), what is the actual LTV of Stephen's mortgage loan? [Answer in % with 2 decimal places.] ( 3 marks)