Proven Tips to Know if Your Interest Rate Is Too High

Is Your Interest Rate High Compared to Market Rates?

Your rate is too high if it sits more than 0.3% to 0.5% above what a new borrower with the same loan type and deposit size would get today from another lender.

You're not comparing your rate to a generic advertised rate. You're comparing it to what you would qualify for if you applied now, based on your current loan-to-value ratio and income. If you took out a loan two or three years ago and haven't refinanced, there's a strong chance your rate is sitting well above what's available now. Lenders don't reward loyalty. They price new business lower and let existing customers sit on higher rates unless those customers ask.

Consider a FIFO truck driver who locked in a variable rate of 6.4% in early 2024. That rate may have seemed reasonable at the time, but if current variable rates for similar borrowers are sitting around 5.9%, that's a 0.5% gap. On a loan of $500,000, that difference costs roughly $210 a month, or $2,500 a year. Over five years, that's $12,500 you're handing over for no reason other than inertia.

What Does the Comparison Rate Actually Tell You?

The comparison rate rolls your interest rate and most ongoing fees into a single figure so you can compare the true cost of one loan against another.

It's calculated over a standard 25-year loan term and a $150,000 loan amount, which means it's useful for spotting fee-heavy products but less useful if your loan size or term is different. A loan with a 6.0% interest rate and a $395 annual package fee might have a comparison rate of 6.15%. Another loan at 6.1% with no annual fee might have a comparison rate of 6.10%. The second loan costs you less overall, even though the interest rate looks higher at first glance.

Where this gets relevant for FIFO workers is when you're comparing a basic variable product against a packaged loan. Some lenders waive application fees, valuation fees, or ongoing fees if you hold a package, but charge a higher interest rate or an annual fee in return. The comparison rate helps you see whether that trade-off is worth it. If the comparison rate is lower, the loan is cheaper. If it's higher, it's not.

How to Check What Rates You'd Qualify for Now

You need to know your current loan-to-value ratio and how lenders assess your income before you can work out what rate you'd qualify for.

Your LVR is the amount you owe divided by the current value of your property. If you owe $400,000 and your property is now worth $600,000, your LVR is roughly 67%. That's a strong position. Most lenders will offer their lowest rates to borrowers with an LVR under 70% or 80%, depending on the product. If your LVR has improved since you first borrowed, your refinance rate should reflect that.

Income assessment is where FIFO workers hit a variable. Some lenders shade overtime, allowances, and roster-based income, which means they only count a portion of what you actually earn when calculating how much you can borrow or what rate they'll offer. Suncorp, for instance, will assess 80% of non-essential services overtime and allowances if you've earned them continuously for six months or more. That shading doesn't change your actual income, but it does change how the lender sees your capacity and risk profile.

If you were assessed at 80% of your total income when you first borrowed, and you've now been on the same roster for two years with consistent earnings, some lenders will reassess you more favourably. Others won't. That's where speaking to a broker who understands Home Loans for FIFO Workers makes a difference. We know which lenders treat FIFO income fairly and which ones don't.

When Break Costs Make Refinancing Uneconomical

If you're on a fixed rate, you'll likely pay break costs if you refinance before the fixed term ends.

Break costs are the lender's way of recovering the difference between the rate they locked in for you and the rate they can now lend that money out at. If rates have dropped since you fixed, break costs can be significant. If rates have risen, break costs might be zero or close to it. The calculation is opaque and varies by lender, but most will give you a break cost estimate over the phone or through your online account.

In a scenario where your fixed rate is 5.5% and you have two years remaining, but current variable rates are 5.9%, breaking the fixed rate to refinance makes no sense. You'd pay break costs and end up on a higher rate. But if your fixed rate is 6.2% and current variable rates are 5.8%, the gap might justify the cost, depending on how much you owe and how long you plan to hold the loan.

Run the numbers before you commit. If break costs are $8,000 and refinancing saves you $150 a month, it'll take you 53 months to recover the cost. That's over four years. If you're planning to sell or pay down the loan aggressively, refinancing might not stack up. If you're holding the property long-term, it might. This is where a Home Loan Refinancing for FIFO Workers conversation helps. We'll request break cost estimates from your current lender and compare them against the savings you'd actually see, not the savings a calculator assumes.

How Much Could You Save by Switching Lenders?

The dollar saving depends on three things: the rate gap, your loan balance, and how long you keep the new loan.

If you're paying 6.3% on a $450,000 loan and you refinance to 5.8%, your monthly repayment drops by roughly $140. Over a year, that's $1,680. Over five years, it's $8,400, assuming rates and balances stay constant. They won't, but the principle holds. The bigger your loan and the wider the rate gap, the more refinancing is worth.

Some lenders also offer cashback or fee waivers to attract refinance customers. ME Bank, for instance, offers a $2,000 cashback for customers whose loan requires lenders mortgage insurance, provided the loan amount is at least $400,000 and the loan settles within 120 days. That's not a rate reduction, but it offsets some of the upfront cost of switching.

Refinancing isn't without cost. You'll usually pay a discharge fee to your current lender, somewhere between $150 and $400. You might pay an application fee to the new lender, though many waive this. You'll pay for a valuation unless the lender waives it or uses an automated model. And you'll pay settlement fees, which vary by state. In total, expect to pay $1,000 to $2,000 in costs unless you negotiate fee waivers. If your saving over the first year exceeds that amount, refinancing makes sense.

Why FIFO Income Can Limit Your Access to Lower Rates

Lenders who shade your income heavily may only offer you higher-risk pricing, even if your actual repayment history is solid.

This is where the APRA debt-to-income measures become relevant. Banks are now restricted on loans where total debt exceeds six times your gross annual income. If a lender shades your FIFO income to 80%, they're artificially inflating your debt-to-income ratio. That can push you into a higher pricing tier or reduce the maximum loan amount they'll approve, even though you're earning the full amount and making repayments without issue.

Bankwest uses a dedicated FIFO income verification formula: total hours per cycle multiplied by your lowest hourly rate, multiplied by working cycles per year. Everything above your minimum contract hours is treated as overtime. That's a more accurate reflection of FIFO income than a blanket percentage shade, but it still penalises workers whose base hours are low and whose total income relies on overtime and allowances. If your loan was assessed that way originally, refinancing to a lender who treats FIFO income more favourably can unlock a lower rate or a higher borrowing capacity, even if your income hasn't changed.

We work with lenders who understand how FIFO rosters work and who assess income based on what you actually earn, not what a generic policy says you might earn. That's the difference between being priced as a high-risk borrower and being priced fairly.

Call one of our team or book an appointment at a time that works for you. We'll compare your current rate against what you'd qualify for now, request break cost estimates if you're on a fixed term, and walk you through the actual dollar saving after fees. If refinancing makes sense, we'll handle the application. If it doesn't, we'll tell you that too.

Frequently Asked Questions