4 things you need to know about honeymoon home loan

Honeymoons are a special time to enjoy your spouse away from the real world. Real life doesn’t have drinks with tiny umbrellas or mini bars or rose petals arranged in a love heart. It has alarm clocks and replacement buses and talkback radio. And it has mortgage repayments.

Just like a honeymoon phase can’t last forever, neither can your introductory home loan rate. Here’s what you need to know before you sign.

1. ‘Til rate reversion do you part.

On the face of it, honeymoon – or ‘introductory rate’ – home loans can seem like the perfect match for first home buyers. These loans typically feature a compelling low interest rate for six to 12 months. First time buyers can enjoy a lovesick wonderland, making low mortgage payments and having couples’ massages.

But, like all honeymoons, it will come to an end. When your introductory period is over, your low rate will jump back up and your mortgage payment will increase. To avoid over-committing, ensure your budget can take the high payments as well as the low ones, even if your income doesn’t increase in that time.

2. Your higher rate can be a real drainer.

A high revert rate means that a first-time home owner can go from managing a modest mortgage repayment to something much more stressful. A change of only a few percentage points can represent hundreds or even thousands of dollars a month.

And while honeymoon home loans may woo you with the idea of paying off heaps of your loan during the low-rate period, the reality is it’s often too short to be great value.

3. Look for a rate you can love in sickness and in health.

You get home from your Fijian villa and realise your shiny new spouse leaves their dirty socks on the kitchen bench. This is probably something you wish you knew about ahead of time.

To save yourself pain later, look for a lender offering competitive rates before and after the whirlwind romance has settled. That might mean a slightly higher introductory rate, but your wallet will thank you in the long term.

4. Make sure you really know who you’re committing to.

Like overly-keen internet dates, honeymoon loans with higher revert rates can hide skeletons in their closets. Lenders may try to sell you on a more expensive loan that’s packed with features you don’t need. Look for the warning signs: high loan fees, inflexible terms and not saving you a spot at the swim-up bar.

Honeymoon home loans can be a terrific way to make some space for other expenses while you’re settling in as first-time home owners. They don’t have to come with rude shocks or couples’ counselling. Choose a home loan with a consistently competitive rate and zero monthly account fees and enjoy a healthy relationship for years to come.