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Financial Mathematics and Business Statistics: Individual Coursework
Name:
Institution:
Question 2: (25%)
Kyle Dier is looking to buy his first home and through savings and a gift from his parents he has managed to raise £120,000. Kyle has identified two possible properties, a one bedroom flat in the centre of town that costs £350,000 and a three-bedroom house outside of town that costs £500,000 and he’s decided to ask for your help identifying the best mortgage offers he can choose.
Required:
Identify (and clearly indicate them in your submission) a minimum of three lenders Kyle could borrow the money from and discuss the mortgage alternatives available and the respective terms and applicable interest rates;
For Kyle Dier to afford either of the two properties, he will be forced to use his savings in addition to another financing tool which includes a gift from his parents or mortgage.
Option 1: Savings plus parents gift or mortgage
Amount required for one bedroom at the centre of town
Cost – savings = parents gift/loan/mortgage
£350,000 – £120,000 = £230,000
Amount required for 3 bedrooms at the centre of town
£500,000 – £120,000 = £380,000
Therefore, Kyle will require £230,000 for him to purchase the one bedroom house and £380,000 to purchase the three bedroom house out of town centre.

Mortgage types available
There two main types of mortgage that can be utilised effectively to purchase the house are 125 percent and interest only mortgage….