3. What would be the monthly payments on a £250,000 loan:
(i) if it is financed by a repayment mortgage;
(ii) if it is financed by an interest-only mortgage and an investment policy?
Assume that the interest rate is 3%, the return on investments is 5% and the term is 25
years.
Which of these mortgages would you recommend to a risk-averse house purchaser?
Explain your reasoning.