Numeracy Intermediate 2

Part 3:

Applications in Social Arithmetic

Getting a Loan

A bank or building society won't give you a 100% loan. They expect you to pay a deposit yourself, and will lend you the balance you still require.

Example 3.2

A couple want to buy a house for which the asking price is £74,000. The bank values the house at only £72,000 and is prepared to loan only 90% of this. How much must the couple find as a deposit?

Solution:

The loan is 90% of the valuation, i.e. 90% of £72,000.

0.90 × £72,000 = £64,800

But the asking price is £74,000.

So the deposit is (Asking Price) - (Loan) = £74,000 - £64,800 = £9,200.