Understanding Your Financial Position
Before you start applying for a home loan, it's crucial to understand your financial situation. As a FIFO worker in Western Australia, your income structure might look different from traditional employees, but this doesn't mean you're at a disadvantage when buying a home.
Start by gathering your bank statements from the last three to six months. These documents will help demonstrate your borrowing capacity to potential lenders. Your unique work arrangement actually provides several advantages:
• Consistent high income during work periods
• Often higher hourly rates than standard employment
• Regular roster patterns that lenders can assess
• Strong job security in essential industries
Exploring Home Loan Options
When you access Home Loan options from banks and lenders across Australia, you'll discover there are numerous products designed to suit different circumstances. Understanding these options will help you make informed decisions about your loan amount and repayment structure.
The two main interest rate types you'll encounter are:
Fixed Interest Rate Home Loans: These lock in your home loan interest rate for a set period, typically one to five years. This option provides certainty with your repayments, making budgeting easier during your roster cycles.
Variable Home Loan Rates: These fluctuate with market conditions and can offer more flexibility. Many variable rate products come with features like offset accounts, which can help reduce the interest you pay over time.
Getting Pre-Approved
Home Loan pre-approval is a valuable step that shows sellers you're a serious buyer. The pre-approval process involves a lender assessing your financial situation and confirming how much they're willing to lend you.
For FIFO workers, getting loan pre-approval can be particularly beneficial because it demonstrates your financial capability despite having a non-traditional employment arrangement. This can give you confidence when making offers and help you move quickly in the property market.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at FIFO Home Loans today.
Understanding Key Costs and Ratios
Several important factors will influence your Home Loan application:
Loan to Value Ratio (LVR): This is the percentage of the property's value you're borrowing. If you're buying a $500,000 property with a $50,000 deposit, your LVR would be 90%. Higher LVRs typically mean you'll need to pay lenders mortgage insurance (LMI).
Stamp Duty: This state government charge varies depending on your property's value and location. In Western Australia, first home buyers may be eligible for concessions or exemptions.
Interest Rate Discounts: Many lenders offer discounts off their standard variable rates. Your mortgage broker can help negotiate these discounts based on your profile as a FIFO worker.
Calculating Home Loan Repayments
Calculating home loan repayments helps you understand what you can afford. Consider both principal and interest repayments, as well as any additional costs like home and contents insurance, council rates, and ongoing maintenance.
As a FIFO worker, you might also want to explore features like:
• Offset Accounts: These can reduce the interest you pay by offsetting your savings against your loan balance
• Redraw facilities: Allow you to access extra repayments you've made
• Payment flexibility: Some lenders offer options to adjust payment timing to match your roster
For those with limited deposits, low deposit loans for FIFO workers might be worth exploring, and some may qualify for LMI waivers for FIFO workers depending on their occupation and lender.
Making Your Application
The application process involves submitting detailed documentation about your income, expenses, assets, and liabilities. Your employment contracts, roster schedules, and pay slips will be particularly important as they demonstrate the stability and predictability of your FIFO income.
Many lenders now offer a streamlined application process, but having a mortgage broker who understands the FIFO industry can make this process smoother. They know which lenders are most receptive to FIFO applications and can present your financial situation in the most favourable light.
Building Your Home Equity
Once you've purchased your property, your home equity will grow as you pay down your loan and as property values increase. This equity can be valuable for future property purchases or other investment opportunities.
Some FIFO workers use their strong earning capacity to pay extra into their home loans during work periods, building equity faster and reducing the total interest paid over the loan term.
Working with mortgage brokers who understand the unique aspects of FIFO employment can make a significant difference in your home buying journey. They can help you access the right loan products and present your application in a way that highlights your strengths as a borrower.
Call one of our team or book an appointment at a time that works for you to discuss your home loan options and start your property buying journey.
