Honeymoon Home Loans

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Honeymoon Home Loans have a low interest rate during the initial period of the loan, which is called the introductory or honeymoon period, which is usually only for one year.

After the honeymoon period, the loan usually reverts to a Standard Variable Rate Home Loan for a couple of years. These type of loans can vary quite bit from lender to lender, and this is where the benefit of a Mortgage Broker can be of assistance to you.

First time home buyers are fond of these types of loans because of the lower introductory interest rate. This introductory rate can be about one percent lower than the standard variable rate home loan rate, which means lower repayments during the honeymoon period. This can be attractive as the lower introductory rate can provide a bit of a reprieve when the setting up costs for the new home are at it’s highest.

These types of loans can have a number of features such as: repayment flexibility, redraw facility, offset account, portability and line of credit.

When selecting this type of loan, one has to consider that fees and charges for Honeymoon Home Loans can be higher than some of the other loans.



Some Pros
-Lower introductory interest rate during the honeymoon period
-Lower home loan repayments during the honeymoon period
-A bit of a reprieve when set up cost for new home are highest
-Additional money available to help buy furniture for the new home during the homeymoon period


Some Cons
-Increase in repayments after the introductory honeymoon period expires
-May be costly to switch to a different type of loan during the first 2 to 3 years
-May have a higher interest rate after the introductory honeymoon period than the Basic Variable Home Loan rate
-Honymoon Loans may have higher fees
-Honeymoon Loans may have exit fees
-Some lenders have restrictions on extra payments during the honeymoon period
-Honeymoon Loans may have less flexibility

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