Question
The purchase price of a property, with costs, is R950 000 and you are able to obtain a 100% mortgage loan at an interest rate
The purchase price of a property, with costs, is R950 000 and you are able to obtain a 100% mortgage loan at an interest rate of 11%, interest compounded monthly. The term of the loan is 25 years. Assume that property values are expected to rise at a rate of 5% per year. You will be able to rent out the apartment after costs at a rate of R7 000 per month for the first year. Interest and rent are payable at the beginning of each month.
Required (Show all steps): i What is the expected value of the apartment in 25 years time? ii What is the mortgage loan repayment at the beginning of each month? iii What is the net amount you have to pay in each month?
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