What is a honeymoon period?

There are many financial products that include a honeymoon period, which are suppose to help alleviate the burden of a loan for a short initial period of time. An introductory low interest rate on a mortgage is termed a honeymoon period because it is set at a lower interest rate then reverts to a higher rate when the intro period is over. In the long term, this can cost a lot more money wasted on fees or interest, compared to other basic home loans that have a lower interest rate throughout the loan term or even variable rate loans and fixed rate home loans.

The first year of a loan is usually the hardest because particularly for first home buyers, furniture and other costly expenses are needed. A loan with a honeymoon period is targeted at these types of buyers as well as those who stretch their budgets look to a honeymoon period as a haven for a short-term break. However, a honeymoon period is not always the best option when choosing a home loan that will save you money so make sure you compare home loans online to find the best loan to suit your needs.

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