You are borrowing $215,000 to purchase your new home. The mortgage offers a 6% fixed annual rate of interest and the balance is amortized over a 30-year period. You do not have to pay any points or origiantion fees, but a penalty equal to 3% of the remaining loan balance is charged if the loan is repaid in full at any time within the first five years.

If you pay off the remaining balance of the loan after making payments for 7 years, what is the effective cost of borrowing?