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Peter took a fixed-rate, fully amortizing mortgage loan for a 5% interest rate for 10 years (monthly compounding loan), with the loan amount being $90,000. The lender allows him to pay $200 monthly payments for the first three year. Assume negative amortization is allowed. What will be the accrued interest or the amount of increased loan balance for the loan three years later from now?

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Answer:

Accrues Interest $527 and Amount of Increase Loan id $90,527

Explanation:

As the interest Expense amount is more than the Payment made against the loan the residual amount is added to the principal, so that the principal amount is increased. from $90,000 to $90,527.

The amortization working is made in an MS Excel file, Which is attached with this answer Please find it.

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