Why loan term changes matter when refinancing
As a FIFO mobile plant operator, your income patterns and financial goals are unique. When you refinance your home loan, changing your loan term can be one of the most impactful decisions you make. This isn't just about accessing a lower interest rate – it's about structuring your mortgage to work with your FIFO lifestyle and long-term wealth-building plans.
When you change your loan term during refinancing, you're essentially reshaping how quickly you'll own your home outright. A shorter term means higher repayments but less interest paid overall. A longer term reduces your monthly commitments but increases the total cost of your loan.
Understanding your refinancing options
When you access loan options from banks and lenders across Australia, you'll discover various term structures that might suit your situation:
• Shortening your loan term: Reduce from 30 years to 25 or 20 years
• Extending your loan term: Increase to reduce loan repayments
• Splitting your loan: Part shorter term, part longer term
• Interest-only periods: Temporary reprieve before principal and interest
Your financial situation as a mobile plant operator often includes periods of high income during contracts, followed by potential downtime between projects. This income variability makes loan term flexibility particularly valuable.
How shorter loan terms save money
Choosing a shorter loan term when refinancing can save you tens of thousands of dollars. Here's how it works:
On a $500,000 loan amount at a 6% interest rate:
• 30-year term: Total interest paid approximately $579,000
• 25-year term: Total interest paid approximately $466,000
• 20-year term: Total interest paid approximately $358,000
The monthly repayment difference between a 30-year and 25-year term is usually manageable for FIFO workers during active contracts. You can review these calculations through a home loan health check to see your potential savings.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at FIFO Home Loans today.
When extending your loan term makes sense
Sometimes extending your loan term during refinancing is the right choice. This might happen when you want to:
• Consolidate debts into your mortgage at a lower interest rate
• Reduce monthly obligations during career transitions
• Release equity to buy the next property for investment
• Create breathing room in your budget for other financial goals
For FIFO mobile plant operators, having flexibility in your repayments can provide peace of mind during contract gaps. Lower mandatory repayments don't prevent you from paying extra when your income is strong.
The refinancing application process for term changes
Changing your loan term through refinancing follows a streamlined application process. Lenders will assess your application based on:
• Current financial situation and income stability
• Recent bank statements showing your FIFO income pattern
• The loan amount you're refinancing
• Your property's current value
Many lenders have specific policies for FIFO workers that recognise your unique employment situation. You can check eligibility for special lender policies that account for contract-based income when applying for home loans for FIFO mobile plant operators.
Fixed vs variable rates with different terms
When changing your loan term, you'll also choose between variable interest rate and fixed interest rate options. Each combination offers different advantages:
Variable rates give you flexibility to make extra repayments without penalties, which works well with FIFO income patterns. If your fixed rate period ending coincides with your refinancing decision, you might find variable rates offer more repayment flexibility.
Fixed rates provide certainty for budgeting, especially valuable during your first few years with a shortened loan term as you adjust to higher repayments.
Releasing equity while changing terms
Refinancing offers opportunities beyond just changing your loan term. You might consider releasing equity in your property for:
• Expanding your property portfolio
• Debt recycling strategies
• Major renovations or improvements
• Investment opportunities
Combining equity release with a term change requires careful planning to ensure your new repayments remain sustainable throughout different phases of your FIFO career.
Making the right choice for your situation
The optimal loan term depends on your individual circumstances. Consider these factors:
• How many years until you plan to retire
• Whether you want to build wealth through property investment
• Your comfort level with higher repayments during contracts
• Plans for family or lifestyle changes
Talk to specialists who understand FIFO work patterns and can help you access potentially better loan options. They can model different scenarios and show you how various term lengths affect your long-term financial position.
Refinancing with a term change isn't just about securing refinance interest rates – it's about creating a mortgage structure that supports your goals as a FIFO mobile plant operator. The right choice can accelerate your path to homeownership while providing the flexibility you need for your unique career.
Call one of our team or book an appointment at a time that works for you to discuss how changing your loan term during refinancing could benefit your financial future.
