EBE1133 | Business Mathematics Assessment | Management

Preamble:At some time in your life, you may choose to purchase your own home. Home loans are reducing balance loans that often involve borrowing large…

Preamble:At some time in your life, you may choose to purchase your own home. Home loans are reducing balance loans that often involve borrowing large amounts of money over a long period of time. In this assessment task, you will take on the role of a property buyer and investigate the many steps involved in purchasing your own home.1. Selecting your property. Using resources such as newspapers, real estate publications, the internet etc., select a property within Sarawak (unit, townhouse or house) that you would be interested in buying. The property must be priced between RM400 000 and RM800 000. When you have selected your property, attach a copy of the advertisement to your assignment.2. Adding up the costs. There are many costs involved in purchasing a property. Investigate and calculate the costs associated with establishing a loan e.g. loan application fees, establishment fees, inspection costs, stamp duty, legal costs etc.3. Calculating the deposit and amount borrowed. Generally, when you purchase a property, you require a cash deposit. Please calculate the deposit required (based on the purchase price) and the total amount to be borrowed.4. Give at least 3 lenders’ options-maximum loan amount, minimum cash down payment, maximum loan to value, loan term, interest rate, payments, borrower qualifications, prepayment penalty. Comparison between the lenders (in table form). Decision to choose ONLY one lender. Why?5. Minimum monthly repayment. Your monthly repayment is calculated based on the current interest rate, the amount of your loan and the loan period. Justify the reasonableness of your result by investigating an alternative method of calculating your monthly repayment.6. Buying vs renting. Although the “Malaysian dream” is to own your own home, the option of renting may be more financially viable.Analyse both of the options below and make an informed decision to determine which one is more financially viable over a period of 3 years.Justify your decision.Option 1: Buying a property considering:• you purchase the property you have chosen• you have your deposit saved• you make your regular monthly repayments• house maintenance expenses are approximately RM4 000 a year• property values appreciate by 7.7% per annum.Option 2: Renting over a period of three years considering:• You rent a similar property to the one you have chosen. As a general rule, monthly rent payments would be equal to at least RM1 000 of the value of the home.• The deposit you have saved (same as in Option 1) will be invested into a term deposit for the three years at 3.25% per annum, compounding monthly. Let’s block ads! (Why?)

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