# assessment 1 - task 3 mortgage payment? How?!

aat2200
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**23**Registered
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!

Thanks in advance!

## Comments

21AAT Student£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.

23Registered> £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!

34Registered> £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??

21AAT Student"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?

34RegisteredI 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?

2Registered40Registered