Honeymoon Home Loans
Introductory loans or ‘honeymoon’ home loans typically come with the lowest rates for all Perth home loans. They are designed to lure you in with low rates over a set period of time, then the loan reverts to a standard variable rate. The main thing to watch out for here is although the introductory rate is low, the new rate it reverts to down the line can be much higher, so it is important to see what you are really paying in the long run.
The set term is usually from between 6 months to 2 years, and the rate is discounted to attract customers to the loan, and also because the loan will have fewer features and options.
There may be fees for early repayments, so if you are after flexibility in your home loan, you must consider this and also ask about establishment and exit fees.
After the ‘honeymoon period’ is over, your repayments will increase to a higher amount each month as you move onto a higher mortgage rate. Mortgage calculators can help you establish repayments along the way.
The main attraction of these mortgages is obviously the lower interest rates and lower repayments at the start of the loan. It offers borrowers the chance to adapt and adjust to the repayments during the introductory period of home buying. The lower payments allow customers to use the extra funds for other expenses, which can be very useful for people who also need to pay for moving costs and legal fees. Another advantage is that these loans are becoming increasingly competitive which means that borrowers should shop around as there are some great deals now being offered.
However, customers need to find out what the home loan interest rates will be once the loan reverts to make sure that they are paying a competitive standard variable rate once the honeymoon period is over. Borrowers should also ask if the loan will revert to a fixed or variable rate, and whether there are any costs involved for changing or switching the loan during the introductory period.
These loans are suitable for first home buyers who are just starting out as they can benefit from lower repayments at the beginning while adjusting to the commitment of a mortgage. Also, if you are considering refinancing and need more cash short term, you can take advantage of the discount rates and lower repayments. To get the best advice when considering any type of mortgage, speak to a Local Perth Mortgage Broker. Call us on 
or submit your enquiry via our on-line form.