Statement: Cheng Lai lives at home with his mother, father, and two brothers. He recently started a job and is planning

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Statement:
Cheng Lai lives at home with his mother, father, and twobrothers. He recently started a job and is planning to move intohis own flat. He wants to buy a flat three years from now, knowingthat he will need a deposit of at least £8,000 in order to do so.Cheng Lai has just received a sum of £3,000 from a trust fund hisparents set up for him when he was a baby. He has deposited the£3,000 into a savings account.
1: Cheng Lai can obtain a rate of return on hissavings that will enable him to reach his target deposit, if hecommits to a savings plan that runs for five years (rather thanthree) with no scope for early withdrawals. Identify two financialdisadvantages of waiting an extra two years before offering thedeposit to buy a first home?
2: How will Cheng Lai’s efforts to save for adeposit be affected if there is a sharp rise in interest rateswhich causes a fall in house prices?