Honeymoon loans
Honeymoon Home Loans
Honeymoon home loans offer lower interest rates for a set introductory period that usually lasts for six months to one year. The interest rate then goes back to the standard variable rate once the introductory term is completed. This type of home loan is ideal for families who are starting up for they can save more money during the initial term.
Because of the low initial interest rates, honeymoon home loans translate to significant savings that can translate to long-term reductions. If you have an initial interest rate is 6.25%, it can revert to 7.25% after a year. That one percentage difference is big enough to give you savings that you can use for other expenses or future repayments.
While the initial offer of honeymoon rates are tempting, you should look out for restrictions or exclusions that the loan might have. For one, lenders limit the features that the loan has to compensate for the low interest and this can lead to limited repayment flexibility.
Because of the low initial interest rate, you might be tagged with higher repayment or exit fees for about four or five years after the introductory period. This can also entail higher establishment and ongoing fees. There are even some lenders that set a repayment amount during the introductory period to eliminate the borrower’s capacity to lessen the amount of future repayments.
If you would like to avail a honeymoon home loan, better check every possible option first. Keep in mind that there are other home loans that offer more flexibility options and lower total costs. But if you need that breathing room to save more finances, the honeymoon home loan is the right home loan for you.
