Tom wants to purchase a property for $300,000. He can borrow a 80% LTV fixed-rate loan, with 4.5% annual interest rate and a 2% origination fee and no point. Or, he can borrow a 90% LTV fixed-rate loan, with 5.5% annual interest rate, and a 2% origination fee and no point. Both loans have a 30-year amortization period. If he plans to hold the loan till its maturity, what will be the incremental cost of borrowing for him to borrow the additional 10% loan amount?

1.000%

12.641%

12.363%

11.150%

No answer within +/-0.1% of the correct one.