Question

Use your calculator to determine​ (1) the current mortgage payment​ (2) the total interest​ paid, (3) the payment after the first adjustment and​ (4) the maximum payment for each of the following ​$109,400​, ​30-year mortgages. Assume that the initial interest rate is 5.10 percent.

a. Annually​ adjustable, 1 percent per​ year, 5 percent lifetime cap. Assume also that rates increase at least 1 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

b. Fixed for 3 years and then annually​ adjustable, 2 percent per​ year, 5 percent lifetime cap. Assume also that rates increase at least 2 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

c. Fixed for 5 years then annually​ adjustable, 2 percent per​ year, 6 percent lifetime cap. Assume also that rates increase at least 2 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

d. Fixed for 5 years and then adjustable every 5​ years, 3 percent per​ period, 6 percent lifetime cap. Assume also that rates increase at least 3 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

Answer 1

Assuming equal principal repayment, the question can be approached as per following table;

A.

Following assumption was made\\; The interest rates will increase by 1% points. Not 1% of the interest rate.

Year	Loan Out standing - (A)	Repayment of Principal - (B)	Interest rate - ( C)	Interest paid - (D) = A*C
1	109,400	3646.7	5.10%	5579.40
2	105,753	3646.7	6.10%	6450.95
3	102,107	3646.7	7.10%	7249.57
4	98,460	3646.7	8.10%	7975.26
5	94,813	3646.7	9.10%	8628.01
6	91,167	3646.7	10.10%	9207.83
7	87,520	3646.7	10.10%	8839.52
8	83,873	3646.7	10.10%	8471.21
9	80,227	3646.7	10.10%	8102.89
10	76,580	3646.7	10.10%	7734.58
11	72,933	3646.7	10.10%	7366.27
12	69,287	3646.7	10.10%	6997.95
13	65,640	3646.7	10.10%	6629.64
14	61,993	3646.7	10.10%	6261.33
15	58,347	3646.7	10.10%	5893.01
16	54,700	3646.7	10.10%	5524.70
17	51,053	3646.7	10.10%	5156.39
18	47,407	3646.7	10.10%	4788.07
19	43,760	3646.7	10.10%	4419.76
20	40,113	3646.7	10.10%	4051.45
21	36,467	3646.7	10.10%	3683.13
22	32,820	3646.7	10.10%	3314.82
23	29,173	3646.7	10.10%	2946.51
24	25,527	3646.7	10.10%	2578.19
25	21,880	3646.7	10.10%	2209.88
26	18,233	3646.7	10.10%	1841.57
27	14,587	3646.7	10.10%	1473.25
28	10,940	3646.7	10.10%	1104.94
29	7,293	3646.7	10.10%	736.63
30	3,647	3646.7	10.10%	368.31
Total		109400.0		155585.03

B.

Year	Loan Out standing - (A)	Repayment of Principal - (B)	Interest rate - ( C)	Interest paid - (D) = A*C
1	109,400	3646.7	5.10%	5579.40
2	105,753	3646.7	5.10%	5393.42
3	102,107	3646.7	5.10%	5207.44
4	98,460	3646.7	7.10%	6990.66
5	94,813	3646.7	9.10%	8628.01
6	91,167	3646.7	10.10%	9207.83
7	87,520	3646.7	10.10%	8839.52
8	83,873	3646.7	10.10%	8471.21
9	80,227	3646.7	10.10%	8102.89
10	76,580	3646.7	10.10%	7734.58
11	72,933	3646.7	10.10%	7366.27
12	69,287	3646.7	10.10%	6997.95
13	65,640	3646.7	10.10%	6629.64
14	61,993	3646.7	10.10%	6261.33
15	58,347	3646.7	10.10%	5893.01
16	54,700	3646.7	10.10%	5524.70
17	51,053	3646.7	10.10%	5156.39
18	47,407	3646.7	10.10%	4788.07
19	43,760	3646.7	10.10%	4419.76
20	40,113	3646.7	10.10%	4051.45
21	36,467	3646.7	10.10%	3683.13
22	32,820	3646.7	10.10%	3314.82
23	29,173	3646.7	10.10%	2946.51
24	25,527	3646.7	10.10%	2578.19
25	21,880	3646.7	10.10%	2209.88
26	18,233	3646.7	10.10%	1841.57
27	14,587	3646.7	10.10%	1473.25
28	10,940	3646.7	10.10%	1104.94
29	7,293	3646.7	10.10%	736.63
30	3,647	3646.7	10.10%	368.31
Total		109400.0		151500.77

C.

Year	Loan Out standing - (A)	Repayment of Principal - (B)	Interest rate - ( C)	Interest paid - (D) = A*C
1	109,400	3646.7	5.10%	5579.40
2	105,753	3646.7	5.10%	5393.42
3	102,107	3646.7	5.10%	5207.44
4	98,460	3646.7	5.10%	5021.46
5	94,813	3646.7	5.10%	4835.48
6	91,167	3646.7	7.10%	6472.83
7	87,520	3646.7	9.10%	7964.32
8	83,873	3646.7	11.10%	9309.94
9	80,227	3646.7	11.10%	8905.16
10	76,580	3646.7	11.10%	8500.38
11	72,933	3646.7	11.10%	8095.60
12	69,287	3646.7	11.10%	7690.82
13	65,640	3646.7	11.10%	7286.04
14	61,993	3646.7	11.10%	6881.26
15	58,347	3646.7	11.10%	6476.48
16	54,700	3646.7	11.10%	6071.70
17	51,053	3646.7	11.10%	5666.92
18	47,407	3646.7	11.10%	5262.14
19	43,760	3646.7	11.10%	4857.36
20	40,113	3646.7	11.10%	4452.58
21	36,467	3646.7	11.10%	4047.80
22	32,820	3646.7	11.10%	3643.02
23	29,173	3646.7	11.10%	3238.24
24	25,527	3646.7	11.10%	2833.46
25	21,880	3646.7	11.10%	2428.68
26	18,233	3646.7	11.10%	2023.90
27	14,587	3646.7	11.10%	1619.12
28	10,940	3646.7	11.10%	1214.34
29	7,293	3646.7	11.10%	809.56
30	3,647	3646.7	11.10%	404.78
Total		109400.0		152193.63

D.

Year	Loan Out standing - (A)	Repayment of Principal - (B)	Interest rate - ( C)	Interest paid - (D) = A*C
1	109,400	3646.7	5.10%	5579.40
2	105,753	3646.7	5.10%	5393.42
3	102,107	3646.7	5.10%	5207.44
4	98,460	3646.7	5.10%	5021.46
5	94,813	3646.7	5.10%	4835.48
6	91,167	3646.7	8.10%	7384.50
7	87,520	3646.7	8.10%	7089.12
8	83,873	3646.7	8.10%	6793.74
9	80,227	3646.7	8.10%	6498.36
10	76,580	3646.7	8.10%	6202.98
11	72,933	3646.7	11.10%	8095.60
12	69,287	3646.7	11.10%	7690.82
13	65,640	3646.7	11.10%	7286.04
14	61,993	3646.7	11.10%	6881.26
15	58,347	3646.7	11.10%	6476.48
16	54,700	3646.7	11.10%	6071.70
17	51,053	3646.7	11.10%	5666.92
18	47,407	3646.7	11.10%	5262.14
19	43,760	3646.7	11.10%	4857.36
20	40,113	3646.7	11.10%	4452.58
21	36,467	3646.7	11.10%	4047.80
22	32,820	3646.7	11.10%	3643.02
23	29,173	3646.7	11.10%	3238.24
24	25,527	3646.7	11.10%	2833.46
25	21,880	3646.7	11.10%	2428.68
26	18,233	3646.7	11.10%	2023.90
27	14,587	3646.7	11.10%	1619.12
28	10,940	3646.7	11.10%	1214.34
29	7,293	3646.7	11.10%	809.56
30	3,647	3646.7	11.10%	404.78
Total		109400.0		145009.70

Answer 2

(1). The current mortgage payment​ is : $7,127.84/annum

(2). The total interest​ paid : $104,435.34

(3). The payment after the first adjustment : $102,272.16

(4). The maximum payment for each : $7,127.84/annum

NOTE: Please raise separate queries for solutions to the remaining sub-parts.