Planit:UK Endowment Loan Exercise
This case study is specific to financial planning in the United Kingdom, so has fixed values rather than indices by country. For a similar case study applicable to other countries, please see Planit:Loan Calculator Exercise.
Solve for the following problem:
Shawn and Nancy have bought a house together and want to pay off their £250,000 interest-only mortgage as quickly as possible. They are currently making monthly payments of £1,216.89. The mortgage is compounded annually, at an existing interest rate of 6%. How will each of the following payment adjustments affect the difference for the overall amortization period?
Increasing payments by 3% annually ________years
Paying an anniversary lump sum of £1000 ________years
Making two lump sum payments of £10,000 one after the first 3 years, and one after 6 years ________years
[[Check the accuracy of your client against the answer key.