Honeymoon mortgage rates, are they worth considering? Maybe, and you wouldn’t be alone! A growing number of potential first home buyers are opting for this particular product in order to get a low rate to obtain those extra savings on their mortgages.
However, there are also some pros and cons to consider before making your decision. In this blog post, we will discuss the pros and cons of honeymoon rate home loans so that borrowers can make an informed decision about whether or not they are right for them.
1. Honeymoon Home Loans Explained
A honeymoon home loan is a lower interest rate that applies for a set period at the beginning of your loan. For example, you may get a honeymoon discounted rate of say, a low two percent for the first year of your loan, and then revert to the bank’s higher standard rate after that.
The rate on this loan type is lower than the standard one. It’s designed to attract borrowers and is available for a set length of time, after which the interest rate rises in accordance with the banker’s other home loan products.
Use a Honeymoon Loan Calculator
You can calculate loan repayments and overall interest repayments on a honeymoon rate with our honeymoon loan calculator.
With the loan calculator, you’re able to compute loan repayments and total interest payable at the honeymoon rate.
The obvious advantage of honeymoon home loans is that you get lower repayments in the short term. A low two percent is obviously lower than say a high two percent or even higher, so if you can lock in a honeymoon rate for even just 12 months, you’ll be ahead.
But there are some potential drawbacks to honeymoon rates that you need to be aware of before signing on the dotted line.
2. The Cons of Honeymoon Home Loans
If you’re thinking of looking into getting a honeymoon rate, it’s important to weigh the pros and cons before making a decision. The pros of a honeymoon rate are that they offer a special low-interest rate for a set period of time, which means you pay out less money in the short term.
Introductory Rate Home Loans are No Frills
It’s important to consider your financial goals and personal circumstances when deciding whether or not one of these is right for you.
Honeymoon or introductory rate loans are usually a basic, no-frills loan, low in fees, a low rate, but also bereft of features, such as an offset account.
You should also check the conditions to see if you have to pay any early termination fees.
Or, whether or not you’re allowed to make extra repayments.
3. The Pros of a Honeymoon rate Loan
If you’re considering taking out a honeymoon credit product the news isn’t all bad, there are some pros that you should be aware of.
For one, honeymoon loan lenders tend to offer lower rates than the lender’s standard variable rate. This can save you money in the long run on your monthly payments.
Limited Honeymoon Rate Period
Additionally, honeymoon loan rates often come with a fixed interest rate for a set period of time. This can provide peace of mind knowing that your repayments won’t go up unexpectedly.
If you do your research and shop around, a honeymoon home loan can be a great way to save money on your new home.
Do honeymoon Rates Provide Real Savings?
This means that your payments won’t go up unexpectedly during that time period, providing peace of mind. However, it’s important to assess your financial situation and compare offers from more than one lender, and understand all the terms and conditions before signing anything.
Is it True That I am Still Eligible for a First Home Owner Grant if I Obtain a Honeymoon Rate Home Loan?
Yes. Whether or not you qualify for a First Home Owner Grant or other government assistance designed to assist young people in getting into the property market they will not penalize you on the type of home loan you apply for.
4. Who Should Consider Getting a Honeymoon Home Loan?
If you’re planning on buying a home within the next few years, it’s worth considering whether honeymoon loans are a good fit for you. This type of loan product offers a lower interest rate for the first term of the loan, which can save you a lot of extra cash, possibly thousands of dollars over the life of the loan.
There are a few things to keep in mind before you decide to go with a honeymoon home loan, however.
First: these rates are usually only available for fixed-rate loans, so if your first preference is a variable-rate loan (VRM), this probably isn’t the right option for you.
Second: while the lower interest rate is great in the short term after the honeymoon introductory period ends, your interest rate will usually increase. This means that you’ll need to be prepared to make higher mortgage repayments once the initial period ends.
5. How Do You Get the Best Deal On a Honeymoon Mortgage Rate?
There are a few things you can do to get the best deal on a honeymoon introductory home loan. First, shop around and compare rates from different lenders. Make sure to compare both fixed-rate and variable-rate loans to see which option is best for you.
Second, try to get preapproved for a loan before you start shopping for your home. This can help you figure out how much money you’ll be able to borrow, as well as show vendors that you’re serious about purchasing a home.
Third, if you have good credit and a healthy deposit, try to negotiate with your bank for a lower interest rate. Good credit scores and a good sized deposit usually means getting a lower rate is possible, so this could save you even more money in the long run.
6. What are the Alternatives to Honeymoon Mortgage Rates?
If you’re not sure a honeymoon home loan is right for you, there are a few other options to consider.
First, you could get a fixed-rate mortgage. This type of loan offers a steady interest rate for the life of the loan, so your monthly repayments will stay the same over the fixed term no matter what happens with interest rates.
However, be aware you could be restricted from making additional repayments with fixed-rate loans.
Second, you could get a variable-rate mortgage (VRM). At times VRMs can have lower interest rates than fixed-rate mortgages, but they can also increase if market conditions change.
7. Can I Ask for a Better Honeymoon Mortgage Rate?
Yes, you can ask for a better honeymoon mortgage rate. If you feel like you’re not getting the best deal possible, don’t be afraid to negotiate with any credit provider. Remember, there are a lot of finance companies out there and they all want your business. So if you have a good credit score and a decent deposit and you feel you’re not getting the best deal possible, ask for a better rate, or change lenders. Chances are, your lender will be more than happy to work with you. If not, try a new lender. Get your calculator out or ask your mortgage broker to see if you can get a better deal
8. What’s the Best Way to Get Help Finding the Right Honeymoon Home Loan?
The best way to get help finding the right home loan is to deal directly with a mortgage broker, where you can get all of your home loan questions answered. A mortgage broker can help you compare various lenders and products to find the one that suits your needs. They can also provide guidance on how much you can afford to borrow, and what fees and charges are involved.
If you’re not sure where to start, ask friends or family who may have recently purchased a home for recommendations. You can also check out online forums or review websites for customer feedback on numerous lenders. Once you’ve narrowed down your options, it’s important to compare rates, fees and features before applying for a loan.
Applying for a home loan can be a daunting task, but with the right help, it doesn’t have to be. By speaking with a good mortgage broker and doing your research, you can find the right loan for your needs and make your home-buying experience a positive one.
When it comes to getting help finding the right honeymoon home loan, don’t be afraid to ask around for recommendations or consult a mortgage broker. They can help you compare interest rates and products from the different banks, which will make the process of finding a loan much easier. Remember to do your research before applying for any loan, and always read the fine print so you know exactly what you’re signing up for. Buying a home is a big decision, but with the right planning and advice, it can be an exciting and rewarding experience.