Are honeymoon rates a good way to find the best mortgages?

Honeymoon rates are low for an initial introductory period, usually between six months and several years, depending on the loan and the lender.

The interest is low for so long to give you the opportunity to make smaller repayments for a portion of your loan, freeing up funds and temporarily alleviating the burden of a mortgage.

Honeymoon rates may be a good mortgage option if you’re a first home buyer wanting to ease into your mortgage repayments, or if you’ve got a stretched budget and want a short-term break from your usual repayments (keep in mind that if you have an existing loan you’d more than likely have to refinance your mortgage to access a honeymoon rate).

Honeymoon rates may also be a viable loan option if you want to pay off a large portion of your loan while the interest is at a minimum, which could lead you to owning your home sooner. Bear in mind though, the honeymoon period may be too short to make a substantial dent and the lender may limit the additional repayments you can make during the honeymoon stage.

Honeymoon rates offer blissful beginnings but there are some potential pitfalls that you should consider before making any sudden moves.

While discounted rates may offer a temporary budgetary reprieve, once the rate is bumped up it might be a lot higher than you’d like. Lenders will often draw you in with reduced introductory rates and, while inviting, these can sometimes be the most costly options on the market. If they’re on the expensive side, you could end up paying more interest than you would on an average rate home loan.

In addition, if you miss a repayment you may be reverted to the standard rate before you're ready - leaving you in a financial funk.

A final thing to note is that honeymoon rates may have less features, giving you less flexibility to manage your mortgage in a way that suits you.

This really depends on your personal and financial circumstances, and what you feel is best for managing your mortgage. 

If you decide to go down the honeymoon path, make sure to weigh up the pros and cons, and take the time to understand all the terms and conditions, so you know what to expect from day one and aren’t met with any surprises down the line.