When mortgage brokers are assisting their clients with introductory variable rate home loans, they should be well-versed in all aspects of this type of home loan. The introductory period from introductory variable rate home loans typically lasts anywhere from 6 months to 2 years. However, this can vary depending on the individual mortgage broker and their policies.
An introductory rate home loan is a type of home loan that offers a decreased interest rate for a set time period and is generally referred to as a honeymoon home loan. When the introductory period has ended, the home loan interest rate will revert back to an increased interest rate that is typically higher than interest rates on traditional home loans. Mortgage brokers and their clients can easily calculate introductory home loan rates by using an online Introductory Rate Loan Calculator.
Introductory rate home loans are generally offered by mortgage brokers to entice new clients or first-time homebuyers. This type of loan can allow a homeowner to have a chance to recoup their savings funds and take a break from financing their new home through the mortgage repayments that are established and required by their mortgage broker.
While introductory rate home loans are a great option for homeowners looking to catch up with their finances after purchasing a home, there are various disadvantages to be aware of:
- The interest rate will revert to an increased rate that is generally higher than traditional home loans
- Refinancing an introductory rate home loan can result in a homeowner being required to pay high fees and break costs
- If the homeowner is not prepared for the interest rate increase, they can face financial troubles