This is a Savings and Borrowing Question - Junior Cycle Business Studies - Question 5 - 2016

1. Reliability and Trustworthiness: Breda would assess if the financial institution is reliable and well-regarded. This includes checking if the institution is insured against risks.

2. Interest Rates: She would look into the rates of interest offered to ensure her investment grows and consider whether the institution is subject to DIRT (Deposit Interest Retention Tax).

3. Accessibility of Funds: Breda should analyze how easy it is to withdraw her money during the investment term and whether she would be able to use her savings if she needs to borrow in the future. Additionally, convenience regarding the location of the institution plays a role.

A mortgage is a long-term loan used to purchase a private dwelling or house, where the property serves as collateral. This means that the lender can take the property if the borrower fails to repay the loan. Security is typically required, such as the deeds of the house.

To calculate the maximum mortgage:

• 90% of €220,000:

  $0.90 imes 220,000 = €198,000$

• Remaining amount to be considered:

  €290,000 - €220,000 = €70,000

• 80% of €70,000:

  $0.80 imes 70,000 = €56,000$

• Total maximum mortgage:

  €198,000 + €56,000 = €254,000

Hence, the maximum mortgage is €254,000.

To find the required deposit, Breda needs 10% of the house price:

$0.10 imes 290,000 = €29,000$

Thus, the deposit required is €29,000.

The rules were imposed to:

1. Maintain economic stability by preventing excessive lending.
2. Avoid rapid increases in house prices, ensuring affordability.
3. Encourage savings by requiring a deposit.
4. Prevent borrowers from taking on more debt than they can handle.

1. Interest Rate Impact: She should understand how changes in interest rates may affect her repayments and overall financial situation.

2. Financial Commitments: Breda needs to assess if she can afford the repayments alongside any other financial commitments she currently has.

3. Institution Comparison: It's essential for Breda to compare different financial institutions to find the best mortgage terms. Factors like whether she prefers a fixed or variable interest rate could influence her decision.