Analysis of Annuity and Impact of COVID 19 on Mortgage in Mathematical Finance Difference Equations Approach

In this article, annuity and mortgage loan in finance are analyzed through non-homogeneous linear difference equations. Some special cases of first-order linear difference equation are discussed. The impact of the contagious virus COVID 19 on mortgage loan is analyzed. The present and future values of annuity are discussed. If the annuity R is deposited at the end or beginning of each conversion period, then the effect is studied. The characteristics of the mortgage loan and types of amortized loans are discussed. The expressions for the performance measures such as monthly instalment, interest component, principal component in jth instalment and outstanding principal amount after paying certain number of annuities in mortgage loan are derived. The three-month moratorium allowed by the Reserve Bank of India on equated monthly installment (EMI) repayments due to the lockdown is analyzed. The consistency of the results obtained analytically in the proposed model is validated through numerical illustrations.