Honeymoon Home Loans, also known as Discount Home Loans are generally fixed/capped rate loans that offer a reduced interest rate to new borrowers for a short period of time, usually ranging from 6 to 12 months.

Most Honeymoon loans revert to the Standard Variable interest rate at the end of the Honeymoon period. Hence the borrower needs to be prepared for an increase in repayment once the fixed/capped period expires.

During the Honeymoon period, the interest rate cannot go higher but it may go lower if the lender's standard variable interest rate falls. In some circumstances if the borrower chooses to refinance at the end of the Honeymoon period, various penalties can be applied by the lender. However this does tend to vary from lender to lender.

The main attraction of these loans is that they offer the lowest interest rates available in the market, in order to bring on board new customers. While, Discount or Honeymoon Loans do not necessarily provide a lot of flexibility to the borrower, some lenders offer Offset Accounts with these loans.

The customer can be disadvantaged if during their Honeymoon period the Variable lending Rate falls below the fixed Honeymoon rate.