Types of Home Loans: Introductory (or Honeymoon) Rates

Banks often use introductory rates to entice new customers with a cheaper interest rate for a set period of time after the setup of their loan. For example, a 2 year introductory rate of 3.75% will give you very low repayments for the first 2 years (the interest rate is still variable, however), but will usually default to the SVR at the end of the 2 years – at which point you can request your bank reduces your rate, or look into refinancing to a cheaper interest rate.