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Assessment 2: Written Report and Excel Spreadsheet
(15% weight)
This document outlines the following:
1. Objectives
2. Details of the scenario and the steps to follow
3. Formatting requirements
4. Submission requirements
1. Objectives
The objectives of this assignment are: this assignment is to:
- Research the various mortgage products offered by financial institutions; and
- use excel to calculate regular repayments on a loan and prepare an amortization table.
Mortgage repayments are calculated using the present value annuity formula. In Week 4 (Discounted cash flows and valuation), you were introduced to the concept of annuity. Annuity is a series of equally spaced, level cash flows over time. The calculation of annuity can be applied to determine the amount of loan repayment and also in preparing a loan amortisation schedule.
This assignment consists of two parts:
> Part I – Research the mortgage products offered by financial institutions in Australia by visiting their websites and write a report on three mortgage products that are offered including interest rates and fees charged. Please see below for details.
> Part II – Prepare an amortization schedule in Excel using a specified amount of a 25- year loan and one of the mortgage rates you researched for part I. Please see below for details.
2. Details of the scenario and the steps to follow:
- Use the first six digits of your student number as the actual amount borrowed
- Assume you will repay the mortgage over 25 years (term of the loan)
- Assume you make fortnightly payments.
- Select one of the three mortgage offers you have researched for your report to use for part II of the assignment.
- In your report, provide details of the mortgage offer you have selected and explain why you have selected that offer (this is based on the real mortgages you have researched on the internet). Max 800 words.
- Finally, complete the mortgage terms and mortgage summary table, and calculate how much total interest is paid over the life of the mortgage in the Excel Spreadsheet.
Assumptions:
1. You have a full-time job and you are buying your first home (owner-occupier).
2. You are eligible to apply for a mortgage.
You have already saved 20% for the deposit and all other related costs associated with buying the house and applying for the mortgage (e.g. stamp duty, conveyancing & legal fees, pest & building inspections, mortgage registration fees, and loan application fees).
i.e. the amount borrowed excludes the 20% deposit and all the associated costs.
3. You make fortnightly repayments on the amount borrowed (the principal), plus you pay interest on that amount (you cannot have interest-only mortgage). You will pay off the mortgage over 25 years.