Mortgage Assessment - Revision history

Edema: /* Conclusion */

2023-01-22T21:44:08Z

‎Conclusion

Edema: /* Results */

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‎Results

Edema: /* Results */

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‎Results

Edema: /* Results */

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‎Results

Edema: /* Results */

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‎Results

Edema: /* Results */

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‎Results

Edema: /* How to Use Model */

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‎How to Use Model

Edema: /* How to Use Model */

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‎How to Use Model

Edema: /* Variables */

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‎Variables

Edema: /* Variables */

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‎Variables

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 == Conclusion ==
 From the simulation, we can concluded that several factor contribute to the overall amount owed to a lender. Taxes, Insurance add to Interest to determine amount owed. A borrower must strife to avoid defaults. Defaults extend repayment period and make mortgage more expensive. In situations where defaults are unavoidable, a borrower should plan toward additional repayments.
 == References ==

@@ Line 217: / Line 217: @@
 [[File:MOrtgages Outstanding 4.png]]
-From this simulation, it is clear that when there are defaults and even with additional repayments, full amount cannot be paid within expected repayment time.
+From this simulation, it is clear that when there are defaults, full amount cannot be paid within expected repayment time even with additional repayments. Larger additional repayment amounts might be required to repay on time or ahead of time.
 == Conclusion ==

@@ Line 201: / Line 201: @@
 [[File:MOrtgages Outstanding 2.png]]
-From this simulation, it is clear that when monthly repayments are paid on as scheduled with no defaults and no additional repayments, full amount is paid within expected repayment time.
+From this simulation, it is clear that when monthly repayments are paid as scheduled with no defaults and no additional repayments, full amount is paid within expected repayment time.
 '''Result Two'''
@@ Line 209: / Line 209: @@
 [[File:MOrtgages Outstanding 3.png]]
-From this simulation, it is clear that when monthly repayments are paid on as scheduled with no defaults and some additional repayments, full amount is paid ahead of repayment time. This can be shown by the negative graph
+From this simulation, it is clear that when monthly repayments are paid as scheduled with no defaults and some additional repayments, full amount is paid ahead of repayment time. This can be shown by the negative graph
 '''Result Three'''

@@ Line 201: / Line 201: @@
 [[File:MOrtgages Outstanding 2.png]]
-From this simulation, and inputs, it is clear that when monthly repayments are paid on as scheduled with no defaults and no additional repayments, full amount is paid within expected repayment time.
+From this simulation, it is clear that when monthly repayments are paid on as scheduled with no defaults and no additional repayments, full amount is paid within expected repayment time.
 '''Result Two'''
@@ Line 209: / Line 209: @@
 [[File:MOrtgages Outstanding 3.png]]
-From this simulation, and inputs, it is clear that when monthly repayments are paid on as scheduled with no defaults and some additional repayments, full amount is paid ahead of repayment time. This can be shown by the negative graph
+From this simulation, it is clear that when monthly repayments are paid on as scheduled with no defaults and some additional repayments, full amount is paid ahead of repayment time. This can be shown by the negative graph
 '''Result Three'''
@@ Line 217: / Line 217: @@
 [[File:MOrtgages Outstanding 4.png]]
-From this simulation, and inputs, it is clear that when there are defaults and even with additional repayments, full amount cannot be paid within expected repayment time.
+From this simulation, it is clear that when there are defaults and even with additional repayments, full amount cannot be paid within expected repayment time.
 == Conclusion ==

@@ Line 197: / Line 197: @@
 '''Result One'''
-Loan life of 30 years, O CZK Additional Repayment, O CZK Additional Repayments, Repayment Period = 360 months, Period Elapsed = 360 months, No Defaults
+Loan life of 30 years, 0 CZK Additional Repayment, 0 CZK Additional Repayments, Repayment Period = 360 months, Period Elapsed = 360 months, No Defaults
 [[File:MOrtgages Outstanding 2.png]]
@@ Line 205: / Line 205: @@
 '''Result Two'''
-Loan life of 30 years, 240,000 CZK Additional Repayment, O CZK Additional Repayments, Repayment Period = 360 months, Period Elapsed = 360 months, No Defaults
+Loan life of 30 years, 240,000 CZK Additional Repayment, 0 CZK Additional Repayments, Repayment Period = 360 months, Period Elapsed = 360 months, No Defaults
 [[File:MOrtgages Outstanding 3.png]]

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 ==  How to Use Model ==
-The key outputs of this model are
+The key outputs of this model are:
 . The Monthly Repayment Amount
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 . Period Elapsed
 The resulting outputs can be analyzed using the following tools available on Vensim:

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 . The Monthly Repayment Amount
 . Total Mortgage Amount
 . Total Amount Repaid
 . Total Mortgage Outstanding
 To simulate these outputs, a user will adjust the variables listed below. The resulting output depends on a combination of these inputs:
 . Premium Percentage
 . Tax Rate
 . Value of Property
 . Interest Rate
 . Life of Loan
 . Number of Defaults
 . Additional Repayments
 . Period Elapsed
@@ Line 170: / Line 181: @@
 . Causes Strip
 . Graph
 . Table
 . Table Time Down
 == Results ==

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 '''Premium Percentage '''
-T he premium percentage used here is based on a borrowers credit scores. Higher credit scores equal lower rate. A range of 10% to 40% was used. This value is a constant value.
+ The premium percentage used here is based on a borrowers credit scores. Higher credit scores equal lower rate. A range of 10% to 40% was used. This value is a constant value.
 Premium Percentage = 0.2

@@ Line 49: / Line 49: @@
 '''Premium Percentage '''
-The premium percentage used here is based on a borrowers credit scores. Higher credit scores equal lower rate. A range of 10% to 40% was used. This value is a constant value.
+T he premium percentage used here is based on a borrowers credit scores. Higher credit scores equal lower rate. A range of 10% to 40% was used. This value is a constant value.
 Premium Percentage = 0.2
@@ Line 55: / Line 55: @@
 '''Insurance Per Month '''
-This is the monthly amount of insurance which forms part on monthly loan repayment amount. This is amount collected is collected in escrow accounts and paid to the insurance company periodically.
+ This is the monthly amount of insurance which forms part on monthly loan repayment amount. This is amount collected is collected in escrow accounts and paid to the insurance company periodically.
 Insurance Per Month = Insurance/12
@@ Line 61: / Line 61: @@
 '''Tax Rate '''
-This is the property tax rate of the Czech Republic.
+ This is the property tax rate of the Czech Republic.
 Tax Rate = 0.04
@@ Line 67: / Line 67: @@
 '''Tax Per Month'''
-This is the monthly amount of tax which forms part on monthly loan repayment amount. This is amount collected is collected in escrow accounts and paid to the government periodically.
+ This is the monthly amount of tax which forms part on monthly loan repayment amount. This is amount collected is collected in escrow accounts and paid to the government periodically.
 Tax Per Month = Tax / 12
@@ Line 73: / Line 73: @@
 '''Value of Property'''
-The is the price of the property a borrower is taking a loan to purchase. A range of 1,500,000 CZK to 10,000,000 CZK was used. This value is a constant value and the first simulation is done with 2,000,000 CZK
+ The is the price of the property a borrower is taking a loan to purchase. A range of 1,500,000 CZK to 10,000,000 CZK was used. This value is a constant value and the first simulation is done with 2,000,000 CZK
 Value of Property = 2,000,000
@@ Line 79: / Line 79: @@
 '''Down Payment'''
-This is the percentage of the value of the property required before loan is given. In the Czech Republic, a down payment of 20% is usually required for mortgages.
+ This is the percentage of the value of the property required before loan is given. In the Czech Republic, a down payment of 20% is usually required for mortgages.
 Down Payment = 0.2 * Value of Property
@@ Line 85: / Line 85: @@
 '''Life of Loan (Years)'''
-This is the total number of years required to repay the entire loan amount. This ranges between 10 to 35 years. The first simulation is done with 30 years
+ This is the total number of years required to repay the entire loan amount. This ranges between 10 to 35 years. The first simulation is done with 30 years
 Life of Loan (Years) = 30
@@ Line 91: / Line 91: @@
 '''Repayment Period'''
-This is the total number of months required to repay the entire loan amount.
+ This is the total number of months required to repay the entire loan amount.
 Repayment Period = "Life of Loan (years)"* 12
@@ Line 97: / Line 97: @@
 '''Interest Rate'''
-Mortgage interest rates in the Czech Republic ranges from 6% to 7%. For this model, The first simulation is done with 6.5%.
+ Mortgage interest rates in the Czech Republic ranges from 6% to 7%. For this model, The first simulation is done with 6.5%.
 Interest Rate = 0.065
@@ Line 103: / Line 103: @@
 '''Month Repayment Amount'''
-This is the monthly repayment amount for the total mortgage. This amount usually has four parts: loan principal, loan interest, taxes, and insurance.
+ This is the monthly repayment amount for the total mortgage. This amount usually has four parts: loan principal, loan interest, taxes, and insurance.
 Month Repayment Amount = (("Principal (Mortgage Loan Amount)" * Interest Rate/12)  / 1 - (1 + Interest Rate/12)^(-Repayment Period)) + Tax Per Month + Insurance Per Month
@@ Line 109: / Line 109: @@
 '''Total Repayments'''
-This is the total monthly repayment at any given period. This can also include additional repayment amounts when a borrower wants to reduce the repayment period.
+ This is the total monthly repayment at any given period. This can also include additional repayment amounts when a borrower wants to reduce the repayment period.
 Total Repayments = ((Monthly Repayment Amount * Period Elapsed) - (Number of Default * Period Elapsed * Monthly Repayment Amount)) + Additional Repayment
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 '''Number of Default'''
-This is when a borrower fails to fulfil repayment obligations. Defaults a due can be due to several conditions such Loss of Employment, Reduction in Income and Ill Health. For this model, we considered the effect of the a number of defaults on repayment time and ability to repay. Also, the max number of loan years is 35 years hence the max default period can be 420 months. The first simulation is done with 0 default.
+ This is when a borrower fails to fulfil repayment obligations. Defaults a due can be due to several conditions such Loss of Employment, Reduction in Income and Ill Health. For this model, we considered the effect of the a number of defaults on repayment time and ability to repay. Also, the max number of loan years is 35 years hence the max default period can be 420 months. The first simulation is done with 0 default.
 Number of Default = 0
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 '''Total Mortgage'''
-This is the total value of the loan when interest is included.
+ This is the total value of the loan when interest is included.
 Total Mortgage = ("Repayment Period (Months)" * Monthly Repayment Amount)
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 '''Additional Repayment'''
-This is any additional repayments the borrower makes outside the monthly repayment amount. For this model, this ranges from )CZK to 1,000,000CZK. The first simulation is done with 0CZK.
+ This is any additional repayments the borrower makes outside the monthly repayment amount. For this model, this ranges from )CZK to 1,000,000CZK. The first simulation is done with 0CZK.
 Additional Repayment = 10000
@@ Line 133: / Line 133: @@
 '''Period Elapsed'''
-This is a time period (in months) after loan was secured. The first simulation is done with 1 month after loan was taken.
+ This is a time period (in months) after loan was secured. The first simulation is done with 1 month after loan was taken.
 Period Elapsed = 1
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 '''Total Mortgage Outstanding'''
-This the Total Mortgage value less Total Repayments made.
+ This the Total Mortgage value less Total Repayments made.
 Total Mortgage Outstanding = Total Mortgage -Total Repayments