Why do honeymoon or introductory rate home loans offer lower interest rates?
Banks and lenders are generally able to offer honeymoon rate home loans of up to 1% per annum off the standard variable interest rate through reduced features and flexibility. An introductory or honeymoon rate home loan may come with higher early repayment or exit fees, higher establishment and ongoing fees, and limited extra repayment options in the introductory period than a standard variable rate home loan. There may also be strict rules about how long you must hold the home loan for after the honeymoon period is over – if you pay out or refinance your loan during this additional period you may be liable for extra fees.
