Sam has a housing loan with the bank before the COVID19 pandemic broke out. The details of the loan are as follows: Prin
Posted: Wed Apr 06, 2022 9:05 am
Sam has a housing loan with the bank before the COVID19 pandemic
broke out. The details of the loan are as follows:
Principal: $1,000,000
Interest Rate: 4% per annum
Tenure: 25 years
Repayment: Amortization with monthly repayment.
The lives of many were affected with jobs lost and businesses
declining by the pandemic. Sam was adversely affected, too, and was
unable to service his loan. Many banks, showed compassion by
allowing homeowners to defer full loan repayments by paying
interest only for 18 months as a relief. When this was announced,
Sam had just paid the 120th instalment of his housing loan.
a) Compute the monthly repayment before the pandemic broke
out?
b) Compute how much Sam has to pay each month during the
relief period?
c) Compute how much Sam is still owing the bank at the end
of the relief period?
d) Compute the monthly repayment when the loan repayment
resumes if he still plans to
discharge the loan fully at the end of the 25th year?
e) Compute how many more months he needs to extend the loan
from the original 25 years if the monthly repayment in part (a)
above is maintained when the repayment resumes?
Show your workings and also justify your answer intuitively.
f) Upon repayment resumption, what if Sam wishes to
maintain the same repayment in part (a) and still discharging the
loan at the end of 25th year, compute how much the
final balloon payment should be at that time?
broke out. The details of the loan are as follows:
Principal: $1,000,000
Interest Rate: 4% per annum
Tenure: 25 years
Repayment: Amortization with monthly repayment.
The lives of many were affected with jobs lost and businesses
declining by the pandemic. Sam was adversely affected, too, and was
unable to service his loan. Many banks, showed compassion by
allowing homeowners to defer full loan repayments by paying
interest only for 18 months as a relief. When this was announced,
Sam had just paid the 120th instalment of his housing loan.
a) Compute the monthly repayment before the pandemic broke
out?
b) Compute how much Sam has to pay each month during the
relief period?
c) Compute how much Sam is still owing the bank at the end
of the relief period?
d) Compute the monthly repayment when the loan repayment
resumes if he still plans to
discharge the loan fully at the end of the 25th year?
e) Compute how many more months he needs to extend the loan
from the original 25 years if the monthly repayment in part (a)
above is maintained when the repayment resumes?
Show your workings and also justify your answer intuitively.
f) Upon repayment resumption, what if Sam wishes to
maintain the same repayment in part (a) and still discharging the
loan at the end of 25th year, compute how much the
final balloon payment should be at that time?