Every borrower wants to find the best deal possible when looking for a home loan. One option many borrowers are turning to is the honeymoon or introductory loan. These loans can save you a lot of money at the beginning of your loan term but they also can come with pitfalls if you don’t fully understand them.

Introductory Period

Honeymoon loans get their name because they have an introductory period that comes with a lower interest rate for borrowers. This introductory period generally lasts between six and twelve months, depending on the loan. During this time borrows pay a low interest rate, sometimes as much as 1% less than that of other variable home loans. This allows borrowers to get used to paying a mortgage or simply save money. Some borrowers are able to pay more than the minimum during this time so they can pay down their principle faster, but this might not be an option for all honeymoon loans so you’ll need to check the terms with your lender to make sure you won’t incur penalty fees for doing so.

Standard Rate

Once the “honeymoon” period is over the interest rate on the loan will increase to a standard variable rate, which could be considerably higher than the rate the borrower had during the introductory period. If you are aware of the loan’s terms and plan ahead for the increase, this shouldn’t be a problem. However, if you’re not prepared, you could have trouble making your higher payments and could put your loan – and your home – in jeopardy. Making sure you understand the terms of your loan is essential. Ensure that you know the worst-case interest rate scenario and can handle it financially before agreeing to the terms of the loan. And don’t be afraid to ask your lender questions along the way.

Comparing Home Loans

Not all honeymoon loans are created equally and you should take time to learn about your choices. The process is quite simple. Borrowers can go online and compare home loans Australia wide to find the right fit. Some lenders may offer additional features with their honeymoon loans and borrowers can compare those as well. In just a short time, borrowers can gain a full understanding of the products and secure a loan that suits their needs without any hidden surprises.

Every borrower wants to find the best deal possible when looking for a home loan. One option many borrowers are turning to is the honeymoon or introductory loan. These loans can save you a lot of money at the beginning of your loan term but they also can come with pitfalls if you don’t fully understand them.

Introductory Period

Honeymoon loans get their name because they have an introductory period that comes with a lower interest rate for borrowers. This introductory period generally lasts between six and twelve months, depending on the loan. During this time borrows pay a low interest rate, sometimes as much as 1% less than that of other variable home loans. This allows borrowers to get used to paying a mortgage or simply save money. Some borrowers are able to pay more than the minimum during this time so they can pay down their principle faster, but this might not be an option for all honeymoon loans so you’ll need to check the terms with your lender to make sure you won’t incur penalty fees for doing so.

Tomorrow Finance provides tools to compare home loans from Australia\’s lenders. When you find the best home loan rates, you save!

Tomorrow Finance provides tools to compare home loans from Australia\’s lenders. When you find the best home loan rates, you save! http://www.tomorrowfinance.com.au

Author Bio: Tomorrow Finance provides tools to compare home loans from Australia\’s lenders. When you find the best home loan rates, you save!

Category: Finances
Keywords: home loans, home loans comparison