assessment 1 - task 3 mortgage payment? How?!

Can anyone please kindly explain how AAT have got to the mortgage monthly payment of £34000? I cannot seem to understand how that is the amount. I thought it was 20700!

Thanks in advance!

Comments

  • kellyprestonkellypreston AAT Student Posts: 18
    £6,000,000 x 3.5% = £210,000 = interest per year.
    £210,000 x 20 = £4,200,000 = total interest.
    £4,200,000 + £6,000,000 = £10,200,000 = total amount of loan.
    £10,200,000 x 80% = £8,160,000 = mortgage 80% of loan.
    £8,160,000 / 20 = £408,000 per annum.
    £408,000 / 12 = £34,000 per month.
    aat2200
  • aat2200aat2200 Registered Posts: 23
    > @kellypreston said:
    > £6,000,000 x 3.5% = £210,000 = interest per year.
    > £210,000 x 20 = £4,200,000 = total interest.
    > £4,200,000 + £6,000,000 = £10,200,000 = total amount of loan.
    > £10,200,000 x 80% = £8,160,000 = mortgage 80% of loan.
    > £8,160,000 / 20 = £408,000 per annum.
    > £408,000 / 12 = £34,000 per month.

    Thanks so much!
  • LucygsyLucygsy Registered Posts: 34
    > @kellypreston said:
    > £6,000,000 x 3.5% = £210,000 = interest per year.
    > £210,000 x 20 = £4,200,000 = total interest.
    > £4,200,000 + £6,000,000 = £10,200,000 = total amount of loan.
    > £10,200,000 x 80% = £8,160,000 = mortgage 80% of loan.
    > £8,160,000 / 20 = £408,000 per annum.
    > £408,000 / 12 = £34,000 per month.

    Howcome interest is charged on the full amount if only 80% is financed via the mortgage? Assuming the other 20% is funded by other means?? Why would interest be charged on an amount not funded by the mortgage??
  • kellyprestonkellypreston AAT Student Posts: 18
    If you read the additional information it says:
    "the mortgage is for a 20 year period and interest is charged on the INITIAL balance at 3.5%"
    So thats why you use the full amount (6M) because that was the initial amount.

    I hope this makes sense?
  • LucygsyLucygsy Registered Posts: 34

    If you read the additional information it says:
    "the mortgage is for a 20 year period and interest is charged on the INITIAL balance at 3.5%"
    So thats why you use the full amount (6M) because that was the initial amount.

    I hope this makes sense?

    Hi.

    I understand the question, however I don't think it logically makes sense. It's like if you were to purchase a car for £1,000 and you place a £200 deposit (therefore 80% LTV) and then paying interest on your money that was contributed. It's not the question that's causing confusion but the concept that you would charge interest on the other 20%. If the remaining 20% was funded by a bank overdraft then there would be the overdraft interest in addition to the mortgage interest.

    Can you see where I am coming from?
    Staceydanielsx
  • WetedWeted Registered Posts: 2
    I also have some problems with homework tasks. I'm happy I've found this forum. before that, I've used this service when I need some assistance with research paper etc
  • StaceydanielsxStaceydanielsx Registered Posts: 34
    @Lucygsy Totally understand, it makes no sense at all
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