Choosing honeymoon rates means you are given an tempting introductory interest rate for around the first 6 to 12 months of your loan. Once the honeymoon duration is complete, your interest rate will usually revert to a variable rate.
Just as you would get to know somebody really well before getting married to them, find as much as you can about your home loan before you invest. This is specially essential when you’re meditating on a loan that offers honeymoon rates.
Honeymoon rates can also engage hefty exit penalties and precise limitations on the features of your home loan. Always make yourself familiar with the fine print before signing yourself up for something that may cause you a lot of stress and worry further down the track.
The problem with this example of loan is that the variable rate can be higher than some of the lower normal loans on the market which means you could end up paying more overall. While this works to the banks’ benefit, watch out of falling into a honeymoon trap that means that you start stuck paying more than you would opt for.
For better or for worse, richer or poorer, inspect all of the home loan alternatives convenient to you before you say “I do” to honeymoon rates.
When prospecting your loan options, you need to look at things clearly, without the rose-tinted glasses of newlyweds. Exactly like in marriage, when Selecting the good loan for you, you ought to always be thinking about the long term. With this in mind, it is important to remember that the lower honeymoon rate applies only in the short term and have to be considered against the current rate that will set your repayments over years to come.
On the flipside, honeymoon rates may be ideal for homeowners who don't want to make considerable monthly repayment in the first year, possibly because of the need to procure furnishings, fittings and other new articles for the home. Also, any extra payments made during the honeymoon period could truly significantly reduce the amount owed, leading to significant economies on interest.
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