Can someone confirm my understanding of how honeymoon rates work for most FIs?
Basically the borrower gets either a very low fixed rate (usually for the first 6-12 months), either that or a percentage under the SVR that is greater than would be offered under the DSVR, so they might get 1.5% off for the first year instead of .7%.
Also:
- I assume the contract would differ, penalizing the borrower more than a contract where they went with the SVR or DSVR over the first few years?
- I assume from the intro rate they would roll to the SVR, not the DSVR and would need to refinance to get to a DSVR, which could be an expensive exercise?
- I assume that a DSVR is normally for the life of the loan (whereas the intro rates are only for the first 6-12 months depending on deal)?
Thanks
Basically the borrower gets either a very low fixed rate (usually for the first 6-12 months), either that or a percentage under the SVR that is greater than would be offered under the DSVR, so they might get 1.5% off for the first year instead of .7%.
Also:
- I assume the contract would differ, penalizing the borrower more than a contract where they went with the SVR or DSVR over the first few years?
- I assume from the intro rate they would roll to the SVR, not the DSVR and would need to refinance to get to a DSVR, which could be an expensive exercise?
- I assume that a DSVR is normally for the life of the loan (whereas the intro rates are only for the first 6-12 months depending on deal)?
Thanks