1. You have a full time job and are going to buy your first home (owner occupier).
2. You are eligible to apply for a mortgage.
3. You have already saved 20% for the deposit and all other related costs associated with buying the house and applying for the mortgage (e.g. stamp duty, conveyancing & legal fees, pest & building inspections, mortgage registration fee, and loan application fee). i.e. the amount borrowed excludes the 20% deposit and all the associated costs.
4. You make fortnightly repayments on the amount borrowed (the principal), plus you pay interest on that amount (you cannot have interest-only mortgage). You will pay off the mortgage over 20 years.
5. After 3 years, the interest rate will increase by 2% and remain unchanged for the next three years (i.e. Year 4, 5, and 6). It will then increase by a further 1 % andremain unchanged for the rest of the loan term (Year 7 onwards).
6. You will get a big promotion in 10 years time. Therefore you plan to repay extra$300 per fortnight from Year 11 onwards
7. Please ignore any government subsidies for first home buyers.

So calculate the following:

1. Initial fortnightly payment of a 20-year mortgage.
2. Fortnightly payment in Year 4 - 6 if the interest rate is increased by 2% after 3 years.
3. Fortnightly payment from Year 7 onwards if the interest rate is further increased by 1% after 6 years.
4. The total interest paid
5. The total cost of the loan
6. Effective annual interest rate of this mortgage

Use Present Value of an Annuity (PVA) equation

To calculate the fortnightly payment in year 4 and 7, you will need find the balance of the loan after 3 and 6 years respectively.

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Mortgage terms
Name of Lender
Start Date of mortgage
Total amount borrowed	$574,025
Loan Period (in years)	20
Frequency of payment	Fortnightly
Compounding periods per year
Nominal annual interest rate	2.19%pa
Interest rate in Year 4 - 6
Interest rate in Year 7 onwards
Extra payments per period

Mortgage Summary
Scheduled initial payment
Payment in Year 4 - 6
Payment in Year 7 onwards
Total no. of scheduled payments
Total no. of actual payments
Total interest
Total cost of loan
Effective Annual interest rate

Prepare amortisation Schedule

No.	Payment Date	Beginning Balance	Repayment	Extra Payment	Interest	Principal	Ending Balance
1