Introductory Rate Loan Calculator

Home loans with introductory rates may attract one with their initial, fixed, extremely low-interest rates, but do these loans save money in the long run? Calculate precisely how much they could cost throughout the loan with the introductory rate loan calculator so you can compare and decide if they are the best option for you.

What is an Introductory Rate Loan Calculator?

You could come across the term "introductory rate" while comparing mortgages. But what exactly is a house loan with an introductory rate, and how might it affect your mortgage payments?

An interest rate that a lender offers new clients is an introductory rate, often known as a "honeymoon rate." As its name suggests, an introductory rate only lasts for a limited time, usually 12 months, before switching to a higher constant variable rate.

The introductory rate calculator helps calculate the amount the lender offers its new clients.

How Does UM Oceania's Introductory Rate Loan Calculator Work?

The introductory rate loan calculator by UM Oceania is a straightforward tool to get hold of. One can easily check their respective rates by just putting in some necessary details like the loan amount, the tenure you wish to choose, the frequency of your repayment, the length of your trial period, the trial interest rate and the variable interest rate. Once you have put in all the above details, you just need to submit them, and the results will be in front of you on your screen.

How to Use the Introductory Rate Loan Calculator?

With the introductory rate loan calculator, figuring out your home purchase costs is simple. Enter your loan amount, loan length, and whether you'll first pay back the loan on a monthly, fortnightly, or weekly basis. To alter the repayment schedule, press the green arrow button.

Next, input the length of your trial period, your trial interest rate, and the variable interest rate that will apply once your loan has expired. To view your results, simply click anywhere on the page.

As it will show you the total interest charged with your introductory rate and the interest you would pay if you didn't have one, you can also use this calculator to estimate the cost of purchasing a home.

Features and Benefits of Introductory Rate Loan Calculator

In addition to helping new borrowers get on top of their mortgage repayments at the beginning of the mortgage, lenders provide introductory rates to lure new clients to join them as a competitive offer.

It's common for funds to be low and the household budget to be tight when a first-time home buyer pays their upfront expenditures like the deposit, stamp duty, or Lender's Mortgage Insurance (LMI), which are frequent. Borrowers may regain control of their finances by paying a lower introductory rate.

Additionally, some first-time home purchasers can use the savings from lower home loan costs in the first year to renovate their new residence with furniture and appliances.

Pros and Cons of Introductory Rate Loans

There are always some pros and cons of a particular scheme, some of which are listed below in the introductory rates of the loan:

Pros

• Initially, the loan's interest rates were very modest

Before the loan transitions to a typical variable interest rate, several lenders provide an introductory interest rate of 1% or lower than their standard variable interest rate. They can provide some of Australia's lowest interest rates.

• Respite from the pricey first months

In the initial few months of their loan, when they have costs like buying furniture and furnishing their new house, first-time homebuyers are drawn by the reprieve from hefty mortgage instalments.

• Offers with no fees, recurring costs, or cashback are alluring

Cashback incentives and no application or recurring fees are fantastic temptations for first-time homebuyers who need to save every penny they can during an expensive purchase.

Cons

• The revert rate may be greater than that of a standard loan

The rate that an introductory loan reverts to can be greater than the ordinary variable rate and a fixed rate loan, which may have a longer fixed period of four to five years rather than one to two years, as demonstrated in the case above.

• Refinancing might result in high break fees.

If borrowers try to transfer before the fixed rate period is through, they may be hit with high exit penalties. This could prevent them from taking advantage of the initial low-interest rate and refinancing.

• Increased loan payments can be unexpected.

First-time homebuyers may experience sticker shock when an introductory loan finally switches to a conventional variable rate, especially if they still need to account for the rise.

Things you Should know About The Introductory Rate Loan Calculator.

Not all lenders offer introductory rate house loans, even though internet lenders have a large selection. Lenders frequently target first-time homebuyers to grow their clientele (or persuade current borrowers to switch house loans).

However, as lenders compete to increase or keep their market share, more introductory rate home loans are offered as the housing loan market gets more competitive and tighter.