The couple borrowed $$600,000$ from bank ABC two years ago to buy an apartment as an investment

property near their restaurant. They have been paying monthly mortgage payments $($principal and interest,

equal amount at the end of each month$)$ with an annual fixed interest rate of $4\mathrm{.}8\%$ for two years and the

mortgage contract has eight years remaining. Since the inflation has reverted to the long$-$term target, the

Reserve Bank of Australia $($RBA$)$ was contemplating to cut interest rate. As such, many commercial banks

started to offer special deals to attract new customers. David and Beth have received an offer from bank

ABA, which presented the below terms:

$1)$ Loan amount: The remaining balance that David and Beth owed to bank ABC;

$2)$ A $10-$year mortgage with a fixed interest rate of $3\mathrm{.}6\%$ per annum;

$3)$ The monthly mortgage repayments need to be made at the end of the month;

$4)$ A bonus of $$5,000$ is offered to customers for transferring an existing mortgage from another bank

and the bonus can be used to reduce the loan amount immediately.

However, having learned that David and Beth are entertaining the offer from bank ABA, the

manager at bank ABC made a counteroffer with a fixed interest rate of $3\mathrm{.}5\%$ but WITHOUT the bonus.

All other terms are the same as those from bank ABA.

$2\mathrm{.}1$ David and Beth are seeking your advice whether to stay with bank ABC or switch to bank ABA.

Include the following tables in your report and explain to the clients how these figures are calculated.

Explain your recommendation to David and Beth.

Table $2\mathrm{.}1$ Current mortgage payment and remaining balance with bank ABC

Monthly payment

Remaining balance

Table $2\mathrm{.}2$ Mortgage payment and loan amount with bank ABA$$s offer

Monthly payment

Loan amount

Table $2\mathrm{.}3$ Mortgage payment and loan amount with bank ABC$$s counteroffer

Monthly payment

Loan amount