Introductory Rate Home Loans
Introductory rate (honey-moon home loans) offer a discount on interest rate in the first 1 to 3 years and later revert to a higher variable rate.
These loans are often used as sweeteners for lenders to attract business; however, the devil is in the detail. The savings made in the first year is often regained by a combination of higher interest rate after the introductory term, high get in and get out fees, high switching fees or exit costs.
A low initial interest rate which later reverts to a significantly higher interest rate after the introductory term has ended
Very high entry, exit fees or change of product fees
Restrictions on refinancing or switching products without severe penalties
Restriction with extra repayments and other features such as offset and redraw
Low initial interest rate to make extra repayments to pay down the loan quicker
Lender allows to change product with out excessive fees.
Ongoing interest rate is competitive to most basic and professional packaged loans.
Refinancing or changing loans can be expensive.
Paying a higher interest at the end of the introductory period.
Can be restrictions on extra repayments.