Asked by Dayne Krachey on May 07, 2024
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A $100,000 mortgage at 6.9% compounded semi-annually with a 20-year amortization requires monthly payments. The mortgage allows the borrower to increase the regular payment by up to 10% once each year. How much will the amortization period be shortened if payments are increased by 10% after the 12th payment, and by another 10% after Payment 24?
Compounded Semi-annually
A method of calculating interest where the interest amount is added to the principal amount twice a year, leading to compound growth.
Amortization Period
The length of time it takes to fully pay off a debt with regular payments that cover both principal and interest.
- Learn to evaluate and figure out the impact of additional or single large payments on the life span of a mortgage's repayment period.
Verified Answer
SP
Learning Objectives
- Learn to evaluate and figure out the impact of additional or single large payments on the life span of a mortgage's repayment period.