Oh Melbourne, aren’t you the perfect place for a young married life?
It wouldn’t be the most liveable city in the world for nothing. Scenic cityscape, excellent infrastructure, hubs for art and culture, premium health care and educational system; you can absolutely fall in love with everything about the Second City.
Although the metro’s house prices are relatively high, as in any major Australian city, securing the right mortgage is the remedy that would keep steep real estate pricing from standing your way to home ownership.
As a newlywed, this may be for your first time buying a piece of the Westbrook Estate or any other estate in the city. In that case, it would be no surprise that you’d come across honeymoon loans. Yes, these mortgages took that name because they’re really intended to help you adjust to what’s going to be a long-term home loan repayment period.
But hold your horses; before you are completely lured by the low rates you’d find, take note of these first:
It Might Have a Payment Cap
Most honeymoon loans have an introductory rate, which allows you to enjoy a lower repayment over a certain period. Getting discounts in your first 12 months is customary, but it could go up to four years. Your rate might substantially increase once it rolls over the standard rate.
However, some lenders would implement a cap on the amount pay off during the mortgage’s introductory period. This limit may make it hard for you to adjust once you have to shoulder the standard rate.
Fixed Discount Isn’t Really Fixed
Your introductory rate may come either as a fixed discount or a discounted fixed. The only difference is the former is liable to change, as it follows the market wherever it goes. The latter, on the other hand, isn’t variable. Confusing one with the other can be costly.
Exiting Early Has a Price
If you’re thinking about getting out of the loan at the end of the introductory rate could cost you a serious amount. Lenders have already thought of this, which why your mortgage provider might penalise you by charging a fixed, steep amount or a portion of the loan’s overall amount. Needless to say, it’s not going to be a painless exit.
Unfair honeymoon loans can only victimise the careless and the imprudent. If you want to start your life in Melbourne on a good note, secure a favourable mortgage first.