Unit C: Personal Finance Half Course V

Unit C: Personal Finance

Half Course V

V-C-2

SENIOR 4 CONSUMER MATHEMATICS • Personal Finance (Half Course V)

HALF COURSE V

The intent of this unit is to have students become aware of why wehave different types of insurance and what is involved inpurchasing a house and obtaining a mortgage.

Specific Learning OutcomesC-1 Solve problems involving different types of insurance.

C-2 Solve problems involving mortgages.

C-3 Describe the costs involved in purchasing a home.

C-4 Interpret the Gross Debt Service Ratio to determine theeconomic feasibility of a home purchase.

Unit C: Personal Finance

Hours: 11

General Learning Outcome:

Demonstrate an awareness of and show theability to solve consumer problems involvinginsurance, mortgages, and loans. (Loans arestudied in Senior 3 Consumer Mathematics.)

V-C-3


Instructional Materials • Essentials in Mathematics 12

• Blackline Masters

• scientific calculator

• spreadsheet program

PERSONAL FINANCE

V-C-4

General OutcomeDemonstrate an awarenessof and show the ability tosolve consumer problemsinvolving insurance,mortgages, and loans.

Specific Outcome(s)C-1 solve problems

involving differenttypes of insurance

Types of insurance that can be examined here includea) renter’s and homeowner’sb) lifec) healthd) dentale) eye caref) long-term disability

Note: The focus of our explorations will be life andproperty insurance. New vocabulary and concepts relatingto insurance are introduced. The definitions are in theEssentials of Mathematics 12 text, but students will needto increase their familiarity with them through discussionand brainstorming. Points for discussion can include• the need for life insurance• how to decide how much insurance is needed• different types of life insurance • terminology—deductible, premium, policy, face-value,

beneficiary• why smokers pay more for life insurance• why people pay more for life insurance as they age

ExampleA female smoker aged 27 buys a $100,000.00, 10-year termlife insurance policy. What will she pay per month?

SolutionUse life insurance tables in the Student Handbook.Insurance rates are given here per $1000.00; hence,

100 x $1.34 + $75.00 = $209.00 per annum $209.00 x 0.09 = $18.81 per month


PRESCRIBED LEARNINGOUTCOMES

SUGGESTIONS FOR INSTRUCTION

!! Communications Patterns!! Connections !! Problem Solving!! Number Sense Reasoning!! Organization and Technology

Structure Visualization

Note: Material from this unit should be incorporatedinto the Career/Life Project in Half Course VI. It isrelevant to personal lifestyle, budgeting, homeownership, and the like.

— continued

V-C-5

ProblemA male smoker aged 25 buys a $50,000 whole-life policy.a) What will he pay per year?b) What will he pay per month?c) What is the total difference in premium over a year

when you pay per month?d) Why do people like to pay on a monthly basis?e) How much less would this person pay per year if he did

not smoke?

PrintSenior 4 Consumer

Mathematics (45S)Part V: A Course forDistance Learning.Winnipeg, MB: ManitobaEducation, Training andYouth, 2002.— Module 1, Lessons 1, 2

Baron, C., et al. Essentials ofMathematics 12. Victoria,BC: British ColumbiaMinistry of Education,2003. [ISBN 0-7726-4997-9]

Canada Mortgage andHousing Corporation(CMHC/SCHL). AConsumer Guide andWorkbook: Home BuyingStep by Step. Toronto,ON: CMHC, 1998-2000.[1-800-668-2642]

Pamphlets available fromthe Insurance Bureau ofCanada [1-800-377-6378]:Insurance: Who Needs It?Home InsuranceExplained


SUGGESTED LEARNINGRESOURCES

SUGGESTIONS FOR ASSESSMENT

V-C-6

C-1 solve problemsinvolving differenttypes of insurance– continued

Notes: The $1.34 comes from the body of the table. The$75.00 is a policy factor added to all annual premiums.Monthly payments are calculated by multiplying theannual premium by 0.09. Sometimes monthly paymentsare referred to as “autopay” and are deducted directly fromyour bank account.

Discuss the need for homeowner’s insurance.• How do you decide how much insurance you need?• Why is it important to review with the insurance broker

exactly what is covered?• Discuss the two basic forms of homeowner’s insurance:

standard and comprehensive.• Discuss the need for insurance for the contents of

condominiums and apartments.

Note: The location of the home affects how much propertyinsurance costs.• Area 1: homes within the city limits• Area 2: Protected: outside the city, but within 300 m of

a fire hydrant• Area 3: Semi-protected: outside areas 1 and 2 but

within 13 km of a fire hall• Area 4: Unprotected: homes located more than 13 km

from a fire hallExampleDiane and Rod have a home in Winnipeg worth $125,000.Find the cost of a homeowner’s comprehensive policy with:a) a $500 deductibleb) a $200 deductible

SolutionUsing the premium table in the Blackline Masters:a) The premium for $125,000.00 is $510.b) To reduce the deductible to $200, the premium is

increased by 10%: $510 + $51 = $561.




!! Communications Patterns!! Connections !! Problem Solving!! Number Sense Reasoning!! Organization and Technology


V-C-7

Problems1. What is the cost for homeowner’s insurance for a house

that has a replacement cost of $120,000?

2. What are some of the factors in determining the cost ofhomeowner’s or tenant’s insurance?

3. A couple has a house they would like to insure for$250,000.00. They have not had any claims in the pastand would like a comprehensive package. If they get a$500.00 deductible, what will they pay for theinsurance?

4. Have students find out what it would cost them to haveinsurance for an apartment in which they might live.Discuss what the contents would be worth, then havethem calculate the cost of the insurance.

5. Calculate the cost of obtaining health, dental, and eyecare insurance. Calculate the cost of life insurance for awhole-life policy of $50,000 for yourself.

Other Invite a life insurance agent

to speak to your students.

Invite a homeowner’sinsurance agent to speakto your students.




V-C-8

C-2 solve problemsinvolving mortgages

Types of mortgages that can be examined here includea) closedb) openc) convertibled) fixed-ratee) variable-rate

Discuss the different types of mortgages available.

Discuss which type of mortgage is suitable for differentpeople.

Be able to calculate the following items, using a calculatorand/or spreadsheet programming:• payment• interest• principal• unpaid balance• owner’s equity• monthly payments at a particular rate over different

time periods• monthly payments of different rates over a particular

time period• difference between monthly payment and bi-weekly

payment at a particular rate over a specified timeperiod

Students may develop a template, using appropriate termsand formulas to solve the problems.

Note: Work with the mortgage calculations can be doneeasily on a spreadsheet program. It is advised thatstudents first use the Owner’s Equity form found in theBlackline Masters to manually work with the calculations.Following these simple steps will help:a) enter the unpaid balance (mortgage) and the owner’s

equity (down payment)b) find the monthly payment using the amortization tablec) find the interest for that month using the formula

unpaid balance x rate12




Communications !! Patterns!! Connections !! Problem Solving!! Number Sense !! Reasoning!! Organization and !! Technology

Structure Visualization — continued

V-C-9

Problems1. What is the difference between an open and a closed

mortgage?

2. If you obtain a mortgage of $80,000 for 20 years at arate of 6.75%, find the monthly payment. What wouldthe monthly payment be if you borrowed this amountfor 15 years?

3. How much interest would be paid for the first andsecond months in (2) above?


Mathematics (45S)Part V: A Course forDistance Learning.Winnipeg, MB: ManitobaEducation and Training,2000.— Module 1, Lessons 3, 4

Pamphlets from a bank onmortgage types

InternetExperiment with mortgage

calculators on majorbank websites:<www.rbc.com><www.cibc.com><www.scotiabank.com>




V-C-10

C-2 solve problemsinvolving mortgages– continued

C-3 describe the costsinvolved in purchasinga home

d) subtract this interest from the monthly payment to getthe principal

e) add the principal to the owner’s equityf) subtract the principal from the unpaid balanceg) using this new unpaid balance, go back to step (c)

Students should notice that the interest paid actually goesdown slightly each month, and the amount of principalincreases. This is due to the unpaid balance or amount ofthe mortgage going down each month.

Discuss the different terms that are related to these topics:down payment, inspection fee, mortgage, application fee,service charges, legal fee, closing cost, assets, debt-equityratio, liabilities.

Discuss why there are additional costs besides the costof the house itself. These are “one-time” costs only.

ExampleThe Jones family lives in Portage la Prairie and isrelocating to Winnipeg. They purchase a house for$140,000.00 and hire a mover to move their belongings.The mover charges $1700.00. A lawyer is hired to lookafter legalities for a fee of $900.00. An appraisal is done ofthe property for a cost of $425.00. The possession date isJuly 9, with the first payment due on July 15. The interestadjustment is $105.00. Property taxes are $2150.00, forwhich the Jones family has agreed to pay for the months ofJuly-December.

Before moving, the Jones family wants to redo the yard for$2500.00, and replace the stove and fridge for $630.00 and$825.00, respectively. They have agreed to split the cost ofthe appliances with the sellers. They want to replace thedrapes with vertical blinds for $1200.00 and paint thebedrooms at a cost of $680.00. The cost to hook up thephone is $25.00 and to activate the natural gas is $55.00.Their annual premium for insurance increases to $540.00from $325.00 per year and they pay the additional for theremaining six months.

Provide students the chart (Costs in Purchasing a Home)given in the Blackline Master section when answeringquestions on additional costs.




!! Communications Patterns!! Connections Problem Solving!! Number Sense !! Reasoning!! Organization and Technology


— continued

V-C-11

Problems1. Describe six additional costs in purchasing a home,

besides the cost of the home itself.

2. If property taxes have been paid for the year ($3085.00)and the purchasers of a home take possession of theproperty in August, what portion of the property taxeswill be paid by the purchaser?

3. If a buyer increases the homeowner’s insurancepremium to $450.00 from $350.00 per year and pays forseven of the 12 months in the year, what is theadditional cost for the buyer?


Mathematics (45S)Part V: A Course forDistance Learning.Winnipeg, MB: ManitobaEducation, Training andYouth, 2002.— Module 1, Lesson 6

Essentials of Mathematics12.Chapter 1: PersonalFinance, Exploration 3




V-C-12

C-3 describe the costsinvolved in purchasinga home– continued

Solution

In the above table:• Home Insurance: ($540.00 – $325.00)(6/12) = $107.50• Prepaid Taxes: ($2150.00)(6/12) = $1075.00• Appliances: ($630.00 + $825.00)(6/12) = $727.50

Appraisal Fees $ 425.00

Inspection Costs $

Property Survey $

Insurance—High Ratio Mortgage $

Home Insurance $ 107.50

Interest Adjustment $ 105.00

Prepaid Property Taxes and Utilities $ 1,075.00

Legal Fees and Disbursements $ 900.00

Sales Tax $

Moving Expenses $ 1,700.00

Service Charges $ 80.00

Immediate Repairs $ 2,500.00

Appliances $ 727.50

Decorating Costs $ 1,880.00

Total Additional Costs $ 9,500.00




!! Communications Patterns!! Connections Problem Solving!! Number Sense !! Reasoning!! Organization and Technology


V-C-13

Problems (continued)4. The Smiths live in Winnipeg and Mr. Smith has

accepted a job in Brandon.

• They purchased a house in Brandon for $150,000,and hired a mover to move their belongings. Themoving charges are $1800.

• Their lawyer fees are $1000.• An appraisal was done on their property for a fee of

$140. A survey of the property was done for a fee of$375. They called in a house inspector to assess thecondition of the new house. The inspector charged$400 and recommended that the siding be replaced.

• The Smiths’ possession date is August 5th. Theinterest adjustment is $457. Annual property taxesare $2850, and the Smiths agree to pay for the fivemonths from August to December.

• Before moving in, the Smiths want to build a fenceand re-side the house at a cost of $5000, replace thecarpet in the living room at a cost of $4200, andpaint the master bedroom and the kitchen at a costof $650.

• The stove has to be replaced at a cost of $850.• They increase their annual insurance premium to

$590 from $425 per year and pay the additionalamount for the remaining five months of the policyyear.

• The cost to hook up the phone is $65 and the cost toactivate the natural gas is $45.

Guest speakers—buyer,real-estate salesperson




V-C-14

C-4 interpret the GrossDebt Service Ratio todetermine theeconomic feasibility ofa home purchase

Affordable Housing• discuss the importance of buying a home within your

financial means• discuss the impact of the additional expenses on home

affordability

Gross debt service ratio =

x 100

For the preceding home purchase activity, either providestudents with the table (see Blackline Masters), or havethem create and save a template on the computer.

ExampleA person decided to buy a house worth $85,000.00. Thedown payment will be $6000.00, the monthly propertytaxes are $120.00, and the heating costs are $110.00 permonth. Calculate the maximum affordable price, themonthly mortgage payment, and the gross debt ratio if thebank will finance the house at 7.50% for 25 years. Thegross monthly income is $2500.00.

This formula will help you determine the price ofthe home you can afford.

(See page V-C-16.)

actual monthly mortgage payment +property taxes + heating

gross monthly income




!! Communications Patterns!! Connections Problem Solving!! Number Sense !! Reasoning

Organization and TechnologyStructure Visualization — continued

V-C-15

ProblemKaren wants to buy a house worth $90,500.00. She makesa down payment of $4000.00. Monthly property taxes are$165.00 and heating costs are $95.00 per month. Calculatethe maximum affordable price, the monthly mortgagepayment, and the gross debt service ratio if the bank willfinance the house at 6.5% for 25 years. Karen’s grossmonthly income is $2800.00.


Mathematics (45S)Part V: A Course forDistance Learning.Winnipeg, MB: ManitobaEducation, Training andYouth, 2002.— Module 1, Lesson 5

Essentials of Mathematics12.Chapter 1: PersonalFinance, Exploration 3




V-C-16

C-4 interpret the GrossDebt Service Ratio todetermine theeconomic feasibility ofa home purchase– continued

This table is based on 25-year amortization. The figuresused in this table do not necessarily reflect current marketrates.

Note: The table is available as a Blackline Master.

Interest Rate Factor Table

Rate Factor Rate Factor Rate Factor

6.0%6.5%7.0%7.5%

0.006400.006700.007000.00732

8.0%8.5%9.0%9.5%

0.007630.007950.008280.00861

10.0%10.5%11.0%11.5%

0.008940.009280.009630.00997

The formula: Your calculations:Gross monthly household income $ 2,500.00Multiply by 32% x 0.32 Total affordable household expenses = $ 800.00Subtract

Monthly property taxes – 120.00Monthly heating costs – 110.00One half of condo/strata fees (if applicable) –

Monthly mortgage payment your household can afford: = $ 570.00To calculate total mortgage amount, divide by estimated interest rate factor which corresponds to your interest rate (see table below). 0.00732

Maximum amount of mortgage you can afford = $77,868.85Add your cash down payment + 6,000.00Your maximum affordable price = $83,868.85Actual mortgage payment(= 0.00732 x [$85,000.00 – $6,000.00]) $ 578.28Gross debt service ratio 32.3%




!! Communications Patterns!! Connections Problem Solving!! Number Sense !! Reasoning

Organization and TechnologyStructure Visualization

V-C-17




Blackline Masters


Blackline Masters V-C-21

Table 1: 10-Year Term

Term PlusMale Non-Smoker Female Non-Smoker Male Smoker Female SmokerIssue Rate per $1,000 Issue Rate per $1,000 Issue Rate per $1,000 Issue Rate per $1,000

AGE$100,000$249,999

$250,000$499,999

$500,000$3,000,000

$100,000$249,999

$250,000$499,999

$500,000$3,000,000

$100,000$249,999

$250,000$499,999

$500,000$3,000,000

$100,000$249,999

$250,000$499,999

$500,000$3,000,000

2021222324

0.850.850.850.850.85

0.810.810.810.810.81

0.770.770.770.770.77

0.800.800.800.800.80

0.760.760.760.760.76

0.730.730.730.730.73

1.431.431.431.431.43

1.361.361.361.361.36

1.301.301.301.301.30

1.321.321.321.321.32

1.251.251.251.251.25

1.201.201.201.201.20

2526272829

0.850.860.870.880.89

0.810.820.830.840.85

0.770.780.790.800.81

0.800.800.800.800.80

0.760.760.760.760.76

0.730.730.730.730.73

1.431.471.521.561.61

1.361.401.441.491.53

1.301.341.391.421.46

1.321.331.341.351.36

1.251.271.281.291.30

1.201.211.221.231.24

3031323334

0.900.961.021.081.14

0.860.910.971.031.08

0.820.870.930.981.04

0.800.860.920.981.04

0.760.820.870.930.99

0.730.780.840.890.95

1.651.781.912.052.18

1.571.691.821.952.07

1.511.621.741.861.98

1.381.471.571.671.77

1.311.401.501.581.68

1.251.341.431.521.62

3536373839

1.201.341.481.621.76

1.141.271.411.541.67

1.091.221.351.471.60

1.101.171.241.311.38

1.051.111.181.241.31

1.001.061.131.191.26

2.312.602.883.173.45

2.202.462.743.013.28

2.102.372.622.883.15

1.872.022.182.332.49

1.781.932.072.212.37

1.711.841.982.122.27

4041424344

1.902.062.222.382.54

1.811.962.112.262.41

1.731.872.022.172.31

1.451.561.671.781.89

1.381.481.591.691.80

1.321.421.521.621.72

3.744.224.715.195.68

3.554.024.484.935.39

3.403.844.284.735.17

2.642.903.173.433.70

2.512.763.013.263.51

2.402.642.883.123.37

4546474849

2.703.033.363.694.02

2.572.883.193.513.82

2.462.763.063.363.66

2.002.232.462.692.92

1.902.122.342.562.77

1.822.032.242.452.66

6.166.607.047.487.92

5.856.276.697.117.52

5.616.016.406.817.21

3.964.495.025.546.07

3.764.274.765.275.76

3.614.084.575.055.52

5051525354

4.354.885.415.946.47

4.134.645.145.646.15

3.964.444.925.415.89

3.153.403.653.904.15

2.993.233.473.713.94

2.873.093.323.553.78

8.369.26

10.1611.0711.97

7.948.809.66

10.5211.37

7.618.439.25

10.0710.89

6.607.247.888.519.15

6.276.887.488.098.69

6.016.597.177.748.33

5556575859

7.007.608.208.809.40

6.657.227.798.368.93

6.376.927.468.018.55

4.404.915.425.936.44

4.184.665.155.636.12

4.004.474.935.405.86

12.8713.6014.3215.0515.77

12.2312.9113.6114.3014.98

11.7212.3813.0413.7014.36

9.7910.5211.2411.9712.69

9.319.99

10.6811.3712.06

8.919.57

10.2310.8911.55

6061626364

10.0011.6013.2014.8016.40

9.5011.0212.5414.0615.58

9.1010.5612.0113.4714.92

6.957.868.779.68

10.59

6.607.478.339.20

10.06

6.327.157.988.819.64

16.5018.7020.9023.1025.30

15.6817.7719.8621.9524.04

15.0217.0219.0221.0223.02

13.4214.8716.3217.7819.23

12.7514.1215.5116.8918.27

12.2113.5314.8516.1817.50

65 66* 67* 68* 69*

18.0019.6021.1022.8024.40

17.1018.6220.1421.6623.18

16.3817.8419.2920.7522.20

11.5012.4113.3214.2315.14

10.9311.7912.6513.5214.38

10.4711.2912.1212.9513.78

27.5029.7031.9034.1036.30

26.1328.2230.3132.4034.49

25.0327.0329.0331.0333.03

20.6822.1323.5825.0426.49

19.6521.0222.4123.7825.17

18.8220.1421.4622.7824.10

70* 71* 72* 73* 74*

26.0027.6029.2030.8032.40

24.7026.2227.7429.2630.78

23.6625.1226.5728.0329.48

16.0516.9617.8718.7819.69

15.2516.1116.9817.8418.71

14.6115.4316.2617.0917.92

38.5040.7042.9045.1047.30

36.5838.6740.7642.8544.94

35.0437.0439.0441.0443.04

27.9429.3930.8432.3033.75

26.5427.9229.3030.6832.07

25.4226.7538.0729.3930.71

Add policy fee of $75 per yearSemi-annual payment (multiply annual premium by 0.52)Monthly payment (multiply annual premium by 0.09)

Table 2: Whole-Life Insurance


V-C-22 Blackline Masters

WHOLE-LIFEMale

Non-SmokerFemale

Non-SmokerMale

SmokerFemaleSmoker

MaleUnder 18

FemaleUnder 18

Issue Rateper $1,000






IssueAge

PremiumRate

PremiumRate

PremiumRate

PremiumRate

IssueAge

IssueAge

PremiumRate

PremiumRate

IssueAge

1819202122

3.503.543.603.964.07

2.822.852.893.043.20

4.314.414.514.724.93

3.133.203.263.443.62

1819202122

01234

1.751.781.801.891.98

1.531.561.591.631.67

01234

2324252627

4.174.284.384.614.82

3.353.513.663.864.05

5.155.365.575.886.19

3.813.994.174.414.66

2324252627

56789

2.052.122.242.352.47

1.711.751.821.891.97

56789

2829303232

5.055.265.465.766.03

4.254.444.644.905.16

6.496.807.117.568.01

4.905.155.395.726.04

2829303232

1011121314

2.582.712.833.013.19

2.052.162.272.342.41

1011121314

151617

3.313.423.46

2.502.582.66

151617

3334353637

6.306.597.117.327.78

5.415.675.936.316.70

8.458.909.35

10.0410.74

6.376.697.027.507.98

3334353637

3839404142

8.258.719.289.75

10.32

7.087.477.858.428.99

11.4312.1312.8213.8614.90

8.478.959.43

10.1410.85

3839404142

Add policy fee of $75.00 per year.

4344454647

10.9011.4812.4012.8113.55

9.5510.1210.6911.2111.73

15.9516.9918.0319.1520.26

11.5512.2612.9713.6814.38

4344454647

Semi-annual payment (multiply annualpremium by 0.52)Monthly payment (multiply annualpremium by 0.09)

4849505152

14.2815.0216.3416.7017.63

12.2612.7813.3014.0314.76

21.3822.4923.6125.0626.52

15.0915.7916.5017.4418.38

4849505152

5354555657

18.5619.5121.1521.7923.17

15.4916.2216.9517.9318.91

27.9729.4330.8832.7334.57

19.3220.2621.2022.3923.58

5354555657

5859606162

24.5325.8927.7029.3231.39

19.8920.8721.8523.2124.57

36.4238.2640.1142.4044.70

24.7825.9727.1628.7130.25

5859606162

6364656667

33.4535.5237.5839.7341.95

25.9327.2928.6530.0831.59

46.9949.2951.5854.4856.60

31.8033.3434.8936.2937.74

6364656667

6869707172

44.3346.8349.4552.2255.15

33.1734.8236.5738.3940.31

58.8161.1263.5165.9868.56

39.2540.8242.4544.1545.91

6869707172

737475

58.2361.5064.94

42.3344.4546.67

71.2374.0176.89

47.7549.6651.65

737475

Table 3: Cash Surrender Values



WHOLE-LIFEMALE

Cash Surrender Value per $1,000 of Sum AssuredFEMALE

Cash Surrender Value per $1,000 of Sum AssuredIssue Age Policy Issue Age

20 25 30 35 40 45 50 55 60 65 70 Year 20 25 30 35 40 45 50 55 60 65 7000012

00013

00014

00026

00038

0005

14

0007

18

0009

23

000

1128

000

1535

000

1841

12345

00011

00012

00013

00015

00027

0004

11

0005

14

0007

19

0009

24

000

1230

000

1637

4678

10

68

101315

811141821

1115192428

1420253036

2332404958

2940516273

3650647791

44617894

111

547494

113133

6487

110133156

6789

10

34679

468

1012

69

111416

812151922

1116202429

1825324047

2333425160

3042536576

3852678195

486583

100118

5879

100121142

1417212428

2127344046

2937445260

3848586878

52688399

115

91124157190223

109145181217252

130168207246284

152193234275316

175218260303345

201245290335380

1112131415

1215182023

1722273237

2329364249

3038465563

4255688194

75103131160188

91122154185216

111146181216251

133171208246284

158199239280320

186231275319364

3339445055

5462697785

738699

112125

94110126142158

141167193219245

256289322355388

288324360396432

323362401439478

356397438479520

387430472515557

424469514558603

1617181920

2832374146

4450566369

59708091

102

7689

103116129

116138159181203

216244273301329

247278310341372

285320355390425

321359397434472

361401442482523

408453497542586

6371788694

96107117128139

140154169183198

181204226249272

284324363403442

405423440458475

451470489508527

499520541562582

544568592616640

587616646675705

626650673698726

2122232425

5259657178

788796

105114

114126138151163

149168188207226

237272306341375

348367387406425

393414435456477

448471494517540

498525551578604

555587618650682

627669710752793

105116127138149

154168183197212

217236254273292

312353393434474

458474490506522

493510528545563

546565583602621

603624645666687

664688712736760

734764793823852

756794841906

1,000

2627282930

8796

105114124

126139151163176

179195212228244

262297332367402

393411429446464

444463482502521

498519539560581

563586609632655

630657683710736

714746777809841

834876917959

1,000164179193208223

231250269288307

333374415456497

489504519534549

538554570585601

580598615633650

640659678697716

708729749770791

784808832856880

882911941970

1,000

-----

3132333435

136149161174186

192209225241258

276308340372404

419436453470487

482500518536554

540559578597617

602623644665686

678701724747770

762789815842868

873905936968

1,000

-----

242261280299318

348389429470511

511526540554569

564579594609624

617633649665681

668685703720738

735754773792811

812833854875896

904928952976

1,000

-----

-----

3637383940

202219235252268

287316345375404

421438455472489

505522539556573

571589607625643

636655674693712

707728749770791

798816839862885

894921947974

1,000

-----

-----

357395434472511

525539553567581

583598612626641

639654669684699

697713729745761

755773790808825

830849867886905

916937958979

1,000

-----

-----

-----

4142434445

295322350377404

421438455472489

506523540557574

590607624641658

661679696714732

732751770789808

812833853874895

908931954977

1,000

-----

-----

-----

525539553567581

595609623637651

655669684698713

714729745760775

777793809825841

843860878895913

924943962981

1,000

-----

-----

-----

-----

4647484950

421438455472489

506523540557574

591608625642659

675692710727744

750768786804821

827847866885904

916937958979

1,000

-----

-----

-----

-----

595609623637651

665679693707721

727741756770784

790805820835850

857872888904920

930948965983

1,000

-----

-----

-----

-----

-----

5152535455

506523540557574

591608625642659

676693711728745

761778795812829

839857875893911

923942962981

1,000

-----

-----

-----

-----

-----

665679693707721

735749762776790

799813828842856

865880895910925

936952968984

1,000

-----

-----

-----

-----

-----

-----

5657585960

591608625642659

676693711728745

762779796813830

846863880897915

929946964982

1,000

-----

-----

-----

-----

-----

-----

735749762776790

804818832846860

871885899914928

940955970985

1,000

-----

-----

-----

-----

-----

-----

-----

6162636465

676693711728745

762779796813830

847864881898915

932949966983

1,000

-----

-----

-----

-----

-----

-----

-----

804818832846860

874888902916930

943957971986

1,000

-----

-----

-----

-----

-----

-----

-----

-----

6667686970

762779796813830

847864881898915

932949966983

1,000

-----

-----

-----

-----

-----

-----

-----

-----

874888902916930

944958972986

1,000

-----

-----

-----

-----

-----

-----

-----

-----

-----

7172737475

847864881898915

932949966983

1,000

-----

-----

-----

-----

-----

-----

-----

-----

-----

944958972986

1,000

-----

-----

-----

-----

-----

-----

-----

-----

-----

-----

7677787980

932949966983

1,000

-----

-----

-----

-----

-----

-----

-----

-----

-----

-----

Every effort has been made to ensure the accuracy of the above values, but accuracyis not guaranteed. In the event of a discrepancy, the insurance policy governs.

Table 4: Tenant’s Package Policy



Tenant’s Package Policy ($500 deductible)All Areas – Manitoba

Coverage Amount Standard Form Comprehensive Form$25,000$30,000$35,000$40,000$45,000$50,000$55,000$60,000$65,000$70,000$75,000

158.00174.00199.00212.00235.00254.00272.00293.00315.00337.00359.00

200.00226.00252.00269.00298.00324.00346.00373.00400.00427.00454.00

Each additional $1,000 $4.50 $5.50

$200 deductible – Increase premium by 10%



Tab

le 5

: Man

itob

a H

omeo

wn

er’s

In

sura

nce

Rat

es

Man

itoba

Hom

eow

ner’s

Insu

ranc

e R

ates

($50

0 de

duct

ible

)B

oeck

h C

alcu

lato

rM

etro

Win

nipe

gAr

ea 2

Area

3Ar

ea 4

Amou

ntSt

anda

rdC

ompr

ehen

sive

Stan

dard

Com

preh

ensi

veSt

anda

rdC

ompr

ehen

sive

Stan

dard

Com

preh

ensi

ve$

50,

000

$ 5

5,00

0$

60,

000

$ 6

5,00

0$

70,

000

$ 7

5,00

0$

80,

000

$ 8

5,00

0$

90,

000

$ 9

5,00

0$1

00,0

00$1

05,0

00$1

10,0

00$1

15,0

00$1

20,0

00$1

25,0

00$1

30,0

00$1

35,0

00$1

40,0

00$1

45,0

00$1

50,0

00$1

55,0

00$1

60,0

00$1

65,0

00$1

70,0

00$1

75,0

00$1

80,0

00$1

85,0

00$1

90,0

00$1

95,0

00$2

00,0

00

195

216

237

252

266

294

310

318

324

348

364

390

402

418

436

451

472

498

523

538

550

557

565

572

590

607

620

636

652

678

692

214

238

260

277

303

314

323

333

349

370

393

417

441

464

487

510

543

557

580

596

604

613

622

629

647

668

686

702

717

742

771

147

160

173

187

200

210

221

226

231

244

260

278

293

299

309

319

339

345

358

375

385

398

413

425

441

451

466

478

492

504

519

161

176

190

205

220

231

243

249

254

268

286

306

322

329

340

351

373

380

394

413

424

438

454

468

485

496

513

526

541

554

571

196

217

237

255

270

285

302

313

324

345

361

378

393

409

424

444

466

477

496

508

520

551

569

589

609

624

648

667

705

720

726

216

239

261

281

297

314

332

344

356

380

397

416

432

450

466

488

513

525

546

559

572

606

626

648

670

686

713

734

776

792

799

261

289

315

339

359

379

402

416

431

459

480

503

523

544

564

591

620

634

660

676

692

733

757

783

810

830

862

887

938

958

966

287

318

347

373

395

417

462

458

474

505

528

553

575

598

620

650

682

697

726

744

761

806

833

861

891

913

948

976

1032

1054

1063

Addi

tiona

l Am

ount

spe

r $10

00 c

over

age

Add:

$3.

15Ad

d: $

3.50

Add:

$2.

75Ad

d: 3

.03

Add:

$3.

55Ad

d: $

3.91

Add:

$4.

72Ad

d: $

5.19

$200

ded

uctib

le –

Incr

ease

pre

miu

m b

y 10

%

Table 6: Amortization Period of Mortgage Loan



Amortization Period of Mortgage Loan(Blended payment of principal and interest per $1,000 of loan)

Interest Rate 5 years 10 years 15 years 20 years 25 years4.00%4.25%4.50%4.75%5.00%5.25%5.50%5.75%6.00%6.25%6.50%6.75%7.00%7.25%7.50%7.75%8.00%8.25%8.50%8.75%9.00%9.25%9.50%9.75%

10.00%10.25%10.50%10.75%11.00%11.25%11.50%11.75%12.00%12.25%12.50%12.75%13.00%13.25%13.50%13.75%14.00%14.25%14.50%14.75%15.00%15.25%15.50%15.75%16.00%

$18.4018.5118.6218.7418.8518.9619.0719.1919.3019.4119.5319.6419.7519.8719.9820.1020.2120.3320.4520.5620.6820.8020.9121.0321.1521.2721.3821.5021.6221.7421.8621.9822.1022.2222.3422.4622.5822.7022.8222.9423.0723.1923.3123.4323.5623.6823.8023.9224.05

$10.1110.2310.3410.4610.5810.7010.8210.9411.0711.1911.3111.4311.5611.6811.8111.9412.0612.1912.3212.4512.5812.7112.8412.9713.1013.2413.3713.5013.6413.7713.9114.0414.1814.3214.4614.5914.7314.8715.0115.1515.2915.4315.5815.7215.8616.0016.1516.2916.44

$7.387.507.637.757.888.018.148.278.408.538.668.808.939.079.219.349.489.629.769.90

10.0510.1910.3310.4810.6210.7710.9211.0611.2111.3611.5111.6611.8211.9712.1212.2812.4312.5912.7412.9013.0613.2113.3713.5313.6913.8514.0114.1714.33

$6.046.176.306.446.576.716.846.987.127.267.417.557.707.847.998.138.288.438.598.748.899.059.209.369.529.689.849.99

10.1610.3210.4810.6510.8110.9811.1411.3111.4811.6411.8111.9812.1512.3212.4912.6712.8413.0113.1813.3613.53

$5.265.405.535.675.825.966.106.256.406.556.706.857.007.167.327.477.637.797.958.128.288.448.618.788.949.119.289.459.639.809.97

10.1410.3210.4910.6710.8511.0211.2011.3811.5611.7411.9212.1012.2812.4612.6412.8313.0113.19

*Interest compounded semi-annually. Actual payment amount may differ slightly.



Comprehensive Coverage Broad Form Coverage

Homeowner’s Building Contents Building Contents

Collapse ! ! ! !

Collapse caused by weight of ice, snow, sleet ! ! ! !

Debris removal ! ! ! !

Escape of fuel oil ! ! ! !

Explosion ! ! ! !

Falling objects striking exterior of building ! ! ! !

Falling objects in interior of building ! ! ! !

Fire ! ! ! !

Fire department charges ! N/C ! N/C

Food freezer contents N/C ! N/C !

Freezing of heating, plumbing, or air conditioningsystems ! ! ! !

Glass breakage — $25.00 deductible ! ! ! !

Hail damage ! ! ! !

Impact of aircraft or land vehicle — includinginsured’s own vehicle ! ! ! !

Lawns, shrubs, trees, and plants ! N/C ! N/C

Lightning ! ! ! !

Melting of snow and ice on roof ! ! ! N/C

Mortgage rate protection ! N/C ! N/C

Moving to a new home N/C ! N/C !

Mysterious disappearance N/C ! N/C N/C

Riot ! ! ! !

Rupture of heating, plumbing, or air conditioningsystems ! ! ! !

Sewer back-up — $5000.00 ! ! N/C N/C

Smoke damage — including smoke from a fireplace ! ! ! !

Theft from the principal dwelling N/C ! N/C !

Theft of contents away from principal dwelling N/C ! N/C !

Theft from an unlocked car N/C ! N/C !

Transportation — excluding water craft and outboard motors ! ! ! !

Vandalism or malicious acts ! ! ! !

Water escape — including waterbeds ! ! ! !

Windstorm ! ! ! !

N/C—Not coveredThis chart is for information purposes only. For details, look at the wording in the insurance policy.



Mortgage Payments

Payment # Due Date Payment Interest Principal Unpaid

BalanceOwner’sEquity

1

2

3

4

5

Interest _____________________________________



Initial Costs in Purchasing a Home

A B C

Appraisal Fee

Inspection Cost

Property Survey

Insurance—High Ratio Mortgage

Home Insurance

Land Transfer Tax

Prepaid Property Taxes and Utilities

Legal Fees and Disbursements

Sales Tax

Moving Expenses

Service Charge

Immediate Repairs

Appliances

Decorating Costs

Total Additional Costs



This formula will help you determine the price of the home you can afford.

The Formula Your CalculationsGross Monthly Household IncomeMultiply by 32% (GDSR) x 0.32Total affordable household expenses Subtract

Monthly property taxes Monthly heating costs One half of condo/strata fees (if applicable)

Monthly mortgage payment your household can afford:

To calculate total mortgage amount, divide byestimated interest rate factor which corresponds to your interest rate (see table below).

Maximum amount of mortgage you can afford Add your cash down payment Your maximum affordable price

Actual mortgage payment= interest rate factor x actual total mortgageGross debt service ratio

Interest Rate Factor Table*Rate Factor Rate Factor Rate Factor6.0% 0.00640 8.0% 0.00763 10.0% 0.008946.5% 0.00670 8.5% 0.00795 10.5% 0.009287.0% 0.00700 9.0% 0.00828 11.0% 0.009637.5% 0.00732 9.5% 0.00861 11.5% 0.00997

*Based on 25-year amortization. Note: The figures used in this table do notnecessarily reflect current market rates.

actual monthly mortgage payment property taxes heatinggross monthly income

+ +=

=

–––

=

÷

=

=+

Unit C: Personal Finance Half Course V

Economy & Finance

Transcript of Unit C: Personal Finance Half Course V