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You are buying a $ 9 7 5 , 0 0 0 house and need to borrow 9 5 % of the value of the

You are buying a $975,000 house and need to borrow 95% of the value of the house (LTV). You can borrow this as a single loan for a term of 25 years. Alternatively, you can split your loan financing and borrow 80% LTV fully amortising loan at 3.79% annual interest maturing in 25 years and the remaining 15% LTV with a fully amortising loan at 12% annual interest maturing in 5 years. What rate should be offered in the single 95% LTV loan for the borrower to be indifferent between the two options (single vs split financing), assuming the house is sold after 5 years and loans repaid? All loans have monthly payments. Enter your answer rounded to two decimal places without the % sign (e.g.2.22% is 2.22)

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