Reverse Honeymoon Loan
As the name suggests this type of loan works in the opposite way to a traditional honeymoon loan. It generally starts at a higher rate before descending, usually, to a standard variable rate.
This product is highly specialised and not often used. It is aimed at investors who are looking to time the tax deductibility of their investment loan and reduce up front loan costs. The loan converts borrowing costs, including the loan mortgage insurance premium and loan application fees into a higher interest rate over the initial period of the loan.
Generally the term of this rate is up to 12 months. Investors like reverse honeymoon loans for two reasons – they are not required to have the cash up front for expenses and it offers the potential for tax benefits.
Given the sophisticated nature of this loan type, it is important to get independent accounting advice to ensure it suits your needs. You should also do plenty of your own research into this loan type, and Mortgageport Consultants are happy to help get you started.
