Short Answer
The RBC Royal Bank offers an "add-on option" on fixed-rate mortgages. The option allows the customer to borrow additional funds partway through the term of the mortgage. The interest rate charged on the combined mortgage debt becomes the weighted average of the old rate on the former balance and the current competitive rate on new mortgage financing. Suppose Herschel and Julie had a mortgage balance of $37,500 at 8%, when they borrowed another $20,000 at 7%. What interest rate will they be charged by the RBC Royal Bank on the new consolidated balance?
Correct Answer:
Verified
Correct Answer:
Verified
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