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Jerrek · 20-05-2004, 06:34

I'm taking some actuarial science courses, and we were discussing mortages. Now I'm wondering... The prof mentioned that in Europe they do mortgages differently than from Canada and the United STates. How?

Here is how we do it:

Principal: $200,000

Amortization Period: 25 years (this is the usual)

Interest rate: 3% compounded semiannually

This translates into 0.2484516% per month. [ (1 + j)^12 = (1.015)^2 ]

Therefore, you pay $946.49 per month for the next 25 years. At the end of 12 years, you are done paying off your mortgage.

In total, you pay ($946.49)(12)(25) = $283,947, meaning, $83,947 is interest.

20-05-2004, 06:34	#1
Jerrek Inactive Join Date: Jul 2003 Posts: 2,545	Mortgages I'm taking some actuarial science courses, and we were discussing mortages. Now I'm wondering... The prof mentioned that in Europe they do mortgages differently than from Canada and the United STates. How? Here is how we do it: Principal: $200,000 Amortization Period: 25 years (this is the usual) Interest rate: 3% compounded semiannually This translates into 0.2484516% per month. [ (1 + j)^12 = (1.015)^2 ] Therefore, you pay $946.49 per month for the next 25 years. At the end of 12 years, you are done paying off your mortgage. In total, you pay ($946.49)(12)(25) = $283,947, meaning, $83,947 is interest.