Posted: December 27th, 2015

A building society offers a variety of different mortgages, and would like to set up a mortgage calculator on their website to help customers choose mortgages that suit them best

A building society offers a variety of different mortgages, and would like to set up a mortgage calculator on their website to help customers choose mortgages that suit them best. A customer should enter some information (eg. house price, current salary, etc.), and the objective (eg. to pay off the mortgage as soon as possible), and get a recommendation. Thebuildingsocietyhiresyoutowriteareportexplainingthemathematicalmodelthatyou are asked to advance, in order to achieve the required mortgage calculator. Your report should include a discussion of the need for the models you choose, the key steps that have to be adopted in the modelling process, a list of relevant input parameters required for the construction of the calculator, a description of a stochastic model that accounts for the variability of mortgage rates in the future, and suggestions for presenting the model output in a convenient way.