Introductory Rate or ‘Honeymoon’ Loan This loan is attractive as it offers lower interest rates than the standard fixed or variable rates for the initial (honeymoon) period of the loan (i.e. six to 12 months) before rolling over to the standard rates. The length of the honeymoon depends on the lender, as too does the rate you pay once the honeymoon is over. This loan usually allows flexibility by allowing you to pay extra off the loan. Be aware of any caps on additional repayments in the initial period, of any exit fees at any time of the loan (usually high if you change immediately after the honeymoon), and what your repayments will be after the loan rolls over to the standard interest rate. These loans are suited to people who want to minimise their initial repayments (whilst perhaps doing renovations) or to those who
wish to make a large dent in their loan through extra repayments while benefiting from the lower rate of interest. |