Originally designed for first-home buyers, but now available more widely, introductory loans offer a discounted interest rate for the first 6 to 12 months, before the rate reverts to the usual variable interest rate.
Pros:
- Lower regular repayments for an initial ‘honeymoon’ period.
Cons:
- Loans may have restrictions, such as no redraw facilities, for the entire length of the loan.
- When the honeymoon rate period ends a homeowner may be locked into an interest rate that is not as competitive as elsewhere.
- Some banks may charge early termination fees if you decide to switch to a new lender.