Some home buyers will find tremendous benefit with a honeymoon loan. Also known as an introductory rate loan, a honeymoon loan features a lower interest rate at the beginning of the loan, usually the first year. The lower rate might be as much as a full percentage point below normal rates, which makes this loan and its lower initial payments an attractive option to many home buyers, especially first time home buyers. Borrowers who choose an introductory rate loan can use the honeymoon period to fine tune their budget, get used to paying a mortgage while the rate is low, or even take advantage of the lower repayment amount to make extra payments to decrease the loan amount ahead of time. The honeymoon loan rate calculator will illustrate the benefits and drawbacks of this introductory rate loan and help borrowers plan their budget and repayments.

 

The honeymoon loan repayment calculator works much like the standard repayment calculator. It takes information about the loan, supplied by you, and calculates the repayment amount. It does not analyze personal finance information, since the goal of this calculator is to give borrowers an idea of repayment amounts for the given variables.

 

The variables entered for this loan are the loan amount (how much you think you’ll need), the total term of the loan, the length of the honeymoon period (since this will vary from bank to bank), the interest rates for both the introductory time frame and the loan’s subsequent interest rate, and the frequency of payments. Once all this is calculated, the honeymoon loan calculator will give the borrower several results. It will list the expected repayment amount for the given frequency in both the honeymoon period and the normal loan period. It will also show the borrower the total amount of interest to be paid over the life of the loan and the total amount of interest paid if this had been a normal loan instead of a honeymoon loan with a lower initial payment amount. This last piece of data is crucial for a borrower to determine if the benefit of the honeymoon loan (lower initial payments) outweighs the drawback (more expensive over the life of the loan).

Important: This calculator is provided to be use as a guide only and should not be considered a quote, a loan offer, or investment advice. Other criteria may need to be considered, and before taking out a loan you should always consult with your personal financial adviser.