18) D

Since the person already has £25000, they need: £150000 – £25000 = £125000

Percentage = (125000/150000) x 100 = 83.3%

We can then eliminate options A and B since we need loan of more than 83%. Option A (mortgage 1) and option B (mortgage 2) offer only 75% and 80% respectively.

Mortgage 3 cost of 1 year = (500) + (5% x 125000) = 500 + 6250 = £6750

Mortgage 4 cost of 1 year = (2000) + (3% x 125000) = 2000 + 3750 = £5750

Mortgage 5 cost of 1 year = (1000) + (4% x 125000) = 1000 + 5000 = £6000

Hence the cheapest is Mortgage 4 which is option D