An Introductory or Honeymoon rate home loan offers a reduced rate of interest at the beginning of the home loan. This honeymoon period typically lasts for 12 months, but can range from 6 months, up to 2 years depending on the lender. After the introductory period is over, the interest rates will revert to the standard rates.
Introductory Home Loan Advantages
- Introductory home loans typically offer the lowest rates of interest.
- The principal (borrowed amount) can be reduced quickly while under the Honeymoon rate of interest.
- Some lenders will even enable Offset accounts on Intro home loans.
Introductory Home Loan Disadvantages
- After the introductory period is over, the interest rate will increase to the standard rate (and possibly even higher than the standard rate) potentially putting you into a strained financial position.
- May have higher establishment and ongoing fees and limited extra repayment options during the introductory period.
Most Suitable For
- First home buyers or borrowers who are initially on a tight budget.
Want to talk more about your home loan options?
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