Honeymoon & Introductory Rate Home Loans
Introductory or Honeymoon Rate home loans provide you with a discount off the standard variable rate at the beginning of the loan. The discount, of up to 1% per annum, will usually be for the first 6-12 months of your loan term.
After this period has finished, your home loan generally reverts to the lender’s standard variable interest rate unless you have negotiated something different with your lender. An introductory or honeymoon rate may be fixed, variable or capped.
Particularly suited to first home buyers the lower repayments in the initial stages of your home loan may enable you to better allocate available funds into other areas such as purchase of furniture.
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Why do honeymoon or introductory rate home loans offer lower interest rates?
Banks and lenders are generally able to offer honeymoon rate home loans of up to 1% per annum off the standard variable interest rate through reduced features and flexibility. An introductory or honeymoon rate home loan may come with higher early repayment or exit fees, higher establishment and ongoing fees, and limited extra repayment options in the introductory period than a standard variable rate home loan. There may also be strict rules about how long you must hold the home loan for after the honeymoon period is over if you pay out or your exit the loan during this additional period you may be liable for extra fees.