Karl is a self-employed dentist who’s currently paying off an $800,000 mortgage in $4000 monthly instalments. However, since Karl first bought his house, his family has grown (two kids!) and his circumstances have changed, so he’s started looking into selling his current place and upgrading to somewhere bigger.
Even with Karl’s annual income of $300,000, plus around $12,000 of additional annual income from shares and investments, his credit limit of $20,000 and monthly expenses of $10,000 mean that his budget will likely be stretched by the $1 million loan he’s planning for his large new house.
The simplest way for Karl to keep the ongoing costs down on his new loan would be to choose a lender with a low interest rate. Any fees charged by a lender are unlikely to make as much of an impact on Karl’s finances as interest charges on such a large amount of borrowed money. When Karl visits a comparison website, he sorts the list of recommended loans by advertised interest rate, so he can find the loans with the most affordable repayments.
Many of the low-interest loans on Karl’s shortlist are fairly simple and straightforward, and don’t offer a lot of extra features or benefits to borrowers. But because Karl is self-employed with a flexible income, he may find it useful for his home loan to have similarly flexible features, such as offset accounts to help further reduce interest charges, and redraw facilities so he can withdraw his extra repayments if required.
The Flexibility Score from RateCity’s Real Time Ratings™ lets Karl quickly work out which low-rate home loans also include features that will suit his financial situation. Plus, he can compare the estimated actual cost of different loans, rather than making a more general comparison using percentage rates.