Been studying GP and been given this as homework - I'm at a loss as to how this is done...
A mortgage of £80k is taken and is to be repaid over 25yrs. Interest is charges at the begining of each year on the outstanding debt at a rate of 7%. Repayments are to be made monthly begining in the first month.
(i) Supposing each repayment is £x. Write down the expression of the outsatnding debt at the end of each of the first three years. In particular,show that the debt after three years is given by:
80000(1.07)^3 - 12x(1 + 1.07 + (1.07)^2)
(ii) Obtain the expression for the debt after 25yrs and use this expression to calculate the monthly repayments.
(iii) Calculate, as a percentage, how much of the mortgage is paid off in each of the first two years.
Youyr help is massively appreciated on this one!