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You wish to buy a house five years from now, which will expectantly cost $550,000 after five years. You will pay parts of this price

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You wish to buy a house five years from now, which will expectantly cost $550,000 after five years. You will pay parts of this price from your personal deposit. You will cover the rest of the purchase price by taking two types of loans at the time of purchase: a 4-year fixed-interest personal loan of $20,000 - a 25-year fixed-interest house loan for the rest of the house price (.e. after paying from the personal deposit and the $20,000 taken as a personal loan at the time of purchase) Currently, you have $5,000 on deposit in a bank account, providing 2.5% p.a. interest compounded monthly. You will also deposit $1,000 monthly into this bank account from now until you purchase the house after 5 years. You also have the following information concerning loans from your bank: Loan Type Interest Rate Interest Compounded Loan Application 25-year fixed interest house loan 4-year fixed-interest personal loan 5% p.a. 10% p.a. Monthly Semi-annually $100 The loan application fee will be added to the amount you borrow from the bank and the repayment will be based on the total amount borrowed (inclusive of loan application fee). Assume that this loan information will remain identical when you purchase the house after five years. For the loans, your repayment frequency per year will be the same as the frequency of interest compounding per year. Thus, for the 25-year house loan, you will repay at the end of every month; and for the 4-year personal loan, you will repay at the end of every semi-annum. Considering the above information, please answer the following: (a) considering your current deposit of $5,000 in your bank account and your plan to deposit $1,000 monthly into the account for 5 years, how much money will you have as a personal deposit at the end of 5 years? (4 marks) (b) Out of the $550,000 house price, you will pay using the personal deposit that you will have after 5 years and a 4-year fixed interest personal loan of $20,000. If such is the case, what will be the amount you will take from the bank as a 25-year fixed interest house loan? [1 mark] (c) Determine your monthly repayment for the house loan. [3 marks] (d) Prepare an amortisation schedule for the personal loan. [8 marks)

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