The interest rate is usually low to attract borrowers. Also known as a honeymoon rate, this rate generally lasts only for or short term before it jumps up to a much higher variable rate (often Standard Variable). Rate types vary between lenders as discounted variable, fixed or capped.
- Usually the lowest available rates
- When payments are made at the introductory rate, the principal can be reduced quickly
- Some lenders also include an offset account
- Reversion rate – Most operate as basic variable loans only you wind up paying Standard Variable Rates
- Can compromise your access to packaged banking discounts
- Upfront costs can sometimes be higher
- Wide variation in introductory terms, reversion rates, introductory rates and establishment makes comparison quite difficult without the right tools and experience