Question

You recently bought a house with a 10year mortgage loan of TK 125,00,000. The lender charges 12% nominal interest. Mortgage payments are made at the end of each quarter. How much total interest you have to pay (in TK) on this mortgage loan?

Answer 1

A)Calculation of total interest payable on mortgage:

First we shall calculate quarterly installment amount(P) as follow:

Quarterly interest rate(r)=$(12\%\times0.25)=0.03$

No.of payments(n)$=10\times4=40$

Loan amount(A)=TK 12500,000

Quarterly installment amount is:

$=A\frac{r(1+r)^n}{(1+r)^n-1}$ ]

$=125,00,000\frac{0.03\times(1+0.03)^{40}}{(1+0.03)^{40}-1}$ ]

=TK 540,779.72375

Thus total interest payable is:

Total amount payable on loan-Loan amount

$=(540,779.72375\times40)-125,00,000$

=TK 9131,188.95