Which of the following factors need to be considered when comparing competing loans, in order to recommend an appropriate housing loan? (i) Affordability. (ii) Flexibility. (iii) Investment risks.

• A. A (i) and (ii) only.
• B. B (i) and (iii) only.
• C. C (ii) and (iii) only.
• D. D (i), (ii) and (iii).

Answer: (D)

When comparing housing loans, you look at how the loan fits the borrower's financial reality, how adaptable the loan is to future changes, and the broader risks involved with using debt to acquire property. Affordability matters because you must ensure the borrower can comfortably meet repayments now and under likely rate movements, without compromising other essential expenses. Flexibility is important because life changes, income variations, or a desire to pay the loan off faster require features like extra repayments, redraw, or different repayment options to respond effectively. Investment risks come into play because taking on a loan for a property ties up capital and exposes the borrower to potential changes in property values, interest rates, and opportunity costs if the funds were used elsewhere; understanding these risks helps compare how each loan preserves or challenges the borrower’s wealth over time.

All three factors are relevant, so evaluating affordability, flexibility, and investment risk together leads to the best recommendation.