Question

Six years ago, Bill Tower borrowed $1,320,000 to purchase a new home. The loan had an interest rate of 6.75% p.a. and a term of 240 months (i.e., required 20 years of monthly payments with the first payment due one month after Bill closed on the loan). What is the current payoff amount on Bill’s loan (that is, immediately after the 72nd payment assuming that Bill has only made the required monthly payment every month)?

Answer 1

Amount of borrowing $1,320,000 Interest rate 6.75%* 1/12 0.5625% Per month = Term 240 Months Monthly payment Amount of borrowing * I / [ 1 - (1 +I^-n] $1,320,000 0.5625% / [1 - (1+0.5625% ^-240] = S7,425/0.739777255 $10,036.80493 $10,036.80 Rounded) Amount of loan * (1 + 1 Y^n - Monthly payment * [( 1 + I Y'n - 1 ] /I S1,320,000 1+0.5625% )^72 - $10,036.80 * [(1 +0.5625% ^72 - 1 ]/0.5625% Remaining balance of loan after 72 months $1,320,000 1497602043 - $10,036.80 88.46258545 $1,976,834.697 - $887,881.2777 $1,088.953.419 Ans Current payoff Bill's loan amount $1,088,953.42 (Approximately)