What is an Introductory loan?

The interest rate is usually low to attract borrowers which may also be known as a honeymoon rate, this rate generally lasts only for around 12 months before it rises. Rates can be fixed or capped and most revert to the standard rates at the end of the honeymoon period.

As with any home loan there are pros and cons, some of the pros are: Usually it is the lowest available rates and when payments are made at the introductory rate, the principal can be reduced quickly, also, some lenders provide an offset account against these loans.

The cons of an introductory loan are that payments usually increase after the introductory period.

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