Check Out A Honeymoon Cheap Home Loan
Looking for a cheap home loan can lead a consumer toward a mortgage product commonly referred to as a honeymoon loan
. These are especially popular for first-time home buyers. Lenders offer lower interest rates through these cheap home loans by limiting any options that normally accompany these products. These limitations may reduce whatever flexibility may be needed if a consumers financial needs change. Additionally, a borrower of a honeymoon cheap home loan may be requires to keep the loan current for a specified period of time adhering to strict repayment rules and regulations. These conditions may have no effect upon a borrower who can successfully predict no change in personal circumstances. These cheap home loans are called honeymoon because the low interest rates are typically available during the first through third year of the loan. Then the rate reverts to a higher number that has been pre-determined at the onset of the transaction.
Ask Questions about a Cheap Home Loan
A savvy consumer will ask prospective lenders about rates so to make comparisons. Inquire about deferred establishment and exit fees in the event that you decide to go a different route. There are existing advantages when obtaining a cheap home loan that include:
The lowest rates available
Lower repayment instalment fees in the beginning of the cheap loan term allowing first-time buyers an opportunity maximise income establishing a new home
The repayments made at the introductory rate help reduce the cheap home loan more quickly when less interest is charged as opposed to being hampered by higher repayments due to market variable rate changes
However, there are certain disadvantages when securing a honeymoon cheap loan. The repayment fee will become larger once the initial honeymoon period is over. The interest rate will revert, typically, to the lending institutions variable rate. This may make this cheap home loan not appear so attractive. But, many competitive lenders will offer guarantees when issuing a honeymoon cheap loan. For example, a lender may offer a .9 percent discount on the current variable rate for the honeymoon period and then guarantee the rate will remain at .2 percent of the published variable rate for the rest of the life of the cheap home loan.
Consider Flexibility and Features
Although obtaining low interest rates on a cheap home loan is an important consideration for any prospective borrower, there are considerations concerning flexibility and different features a consumer may wish to consider. Normally, when a consumer pays a higher interest rate, additional features are available. These may include a redraw facility along with Internet banking features. Carefully examine how interest rates are affected by either the presence or absence of loan features. If certain features are not necessary, obtaining a lower interest rate may be the suitable method to secure. But, keep in mind one of the common practices when a lender offers a low interest rate is to lock a consumer in for a long repayment term. Exit fees may be costly when obtaining a cheap home loan that, in the end, when the cost is added on make this loan not cheap at all.
by: David Nalin
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