Consider a borrower who is contemplating either the 5-year variable open mortgage or the 5-year variable closed mortgage in the amount of $750,000 over the 25-year amortization period on January 17, 2018. Compute the prepayment penalties as a percent of the mortgage amount.
Added by Christopher D.
Step 1
- A 5-year variable open mortgage: typically no prepayment penalty (you can prepay or repay in full at any time). - A 5-year variable closed mortgage: typically the prepayment penalty is three months' interest (most Canadian lenders use 3 months' interest for Show more…
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