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fair value of a monthly payment given two bank payment structures
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there is one basic principle to apply here:  to compare money paid at different times, all the amounts must be compounded or discounted to the same point in time. in this case, the moment of the initial  $225,000 loan is convenient. at that moment, you get $225,000 you then make 30 payments on the 40% mortgage.  the amount of these payments has to be calculated;  they're paying off a $90,000 mortgage with 30 monthly payments at a monthly rate of 0.5% finally, you make 30 payments of an amount x, starting one month after the 40% mortgage ends. so far we've just listed the amount and time of all the payments back and forth. a time-line type diagram is a huge help here. finally, use compound interest and annuity formulas to bring all the payments to the starting point, using an interest rate of 1% a month! equate money in with money out and solve for x
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