Honeymoon Loans or Introductory Rate Loans

Honeymoon Loans or Introductory Rate Loans could either be offset home loans or conventional home loans. Honeymoon loans or introductory rate loans offer an attractive interest rate reduction during the first 6 or 12 months of the loan. At the completion of the introductory period the loan reverts to the lenders standard interest rate for the remaining term of the loan. This rate is often considerably higher than other loans offered by the same lender. To ensure that borrowers don't change their loans at the end of the introductory period lenders have penalty clauses in their loan agreement which will recoup any discount given. Depending on the anticipated time a borrower may take to repay the loan a honeymoon may or may not be financially beneficial.