Honeymoon Introductory Rates Home Loan

There really are some excellent honeymoon or introductory rates on offer in the home loan market. Like many products offered by vendors to attract business, their purpose is to entice customers with attractive, bargain offers. And most are. You simply need to understand how they work and choose the right one for your situation.

What are honeymoon or introductory rates?

Potential borrowers are enticed with a low advertised home loan interest rate that may be as much as one percentage point below the standard home loan rate and therefore look very attractive. The rate can be fixed, capped or variable for the first 6 to 12 months of the home loan. After that period, they usually revert to the standard variable rate offered by that lender.

how do they work?

The most important thing to understand is that lenders can offer cheap interest rates like honeymoon rates by limiting your cost to manage as a customer. This could mean limiting the options and features on a home loan and potentially little flexibility if your situation changes. You might also be required to keep the loan for a specific period of time with strict rules about how you make payments and when you can pay out the loan. This doesn't matter of course if you know your circumstances are not going to change. Always ask for the comparison rate so you know what you are really paying in the long term and ask about deferred establishment and exit fees so that you know what you are up for if you change your mind part way through the 'honeymoon' or 'post honeymoon' agreed terms. Talk to a mortgage broker to help you assess all the pros and cons.

interest rates aren't the only important factor in your home loan decision

Always remember that the interest rate is only part of the overall pricing you should be looking at when you take out a home loan. For a slightly higher interest rate, you can get a range of additional features. Things like redraw facilities and internet banking may be features that you are willing to pay for. Also, make sure you investigate the up-front, exit and ongoing fees which can add up to a lot of money, whether you change your mind about your loan half way through or not. If you are a first time borrower, make sure you find out from your local broker what all the different features and offers are and what they might mean to you. Try to make sure you take an extra few minutes to understand what all the different features and offers are and what they might mean to you over time. It's worth it!

"Cynthia, I am writing a letter from our new home, a thing I never thought was ever going to come true. I thank you so very much for you help and support through the whole process, without this I may have just given up. From the bottom of my heart I thank you very much."

Julie Tilston-Trotter, Upper Caboolture

Long Term 'Honeymoon' Rates with a rate drop

One of X Inc Finance's lenders has a 5 year variable rate 'honeymoon rate' home loan which gives you a reasonable amount of flexibility. This loan also features a interest rate reduction of .1% of the final rate at the end of the five year term. The value proposition is pretty impressive as you not only get a home loan at a lower rate and flexible offering, but the interest rate drops to reward your loyalty at the end of the 5 year term. Click here to find out more.