Smart ways to approach variable rate loan fees and costs

Understanding Variable Rate Loans for FIFO Workers

As a FIFO civil engineer, buying your first home comes with unique challenges. Your income patterns differ from traditional workers, but that doesn't mean homeownership is out of reach. Variable interest rate loans can offer flexibility that suits your working lifestyle, though understanding all associated fees and costs is crucial before you apply for a home loan.

Variable rates fluctuate with market conditions, meaning your repayments can go up or down throughout your loan term. This flexibility can work in your favour when rates drop, potentially saving thousands over the life of your loan. However, it also means budgeting requires careful consideration of your borrowing capacity and financial situation.

Breaking Down the Real Costs

When exploring your first Home Loan options, the interest rate is just one piece of the puzzle. Here are the key costs you'll encounter:

Application and Processing Fees

• Application fees: $200 - $800
• Valuation fees: $300 - $600
• Settlement fees: $150 - $300

Ongoing Costs

• Monthly account keeping fees: $10 - $15
• Annual package fees: $150 - $395
• Redraw fees: $5 - $20 per transaction

Government Charges

• Stamp duty (varies by state and property value)
• Registration fees: $100 - $200
• Transfer fees: $150 - $400

Lenders Mortgage Insurance (LMI) Considerations

If your loan to value ratio (LVR) exceeds 80%, you'll need to pay lenders mortgage insurance (LMI). This protects the lender if you default on your loan. For FIFO workers, LMI calculations can be complex due to variable income patterns. The cost depends on your loan amount and deposit size, ranging from thousands to tens of thousands of dollars.

Some lenders offer LMI waivers for professionals, including engineers. This could save you significant money upfront, making homeownership more accessible even with a smaller deposit.

First Home Buyer Benefits Available

As a first-time buyer, you can access several government schemes:

First Home Owner Grants (FHOG)
Most states offer grants between $10,000 - $45,000 for eligible first home buyers purchasing new homes or building.

Home Guarantee Scheme
This government initiative helps you buy with a deposit as low as 5% without paying LMI. Places are limited and eligibility criteria apply.

First Time Home Buyer Programs
These vary by state but often include:

• Stamp duty concessions or exemptions
• Interest rate discounts
• Reduced deposit requirements

FIFO-Specific Loan Features Worth Considering

Your unique work situation means certain loan features become particularly valuable:

Offset Account Benefits
An offset account lets you park your savings to reduce interest charged on your home loan. For FIFO workers who accumulate savings during roster periods, this can provide substantial interest savings.

Flexible Repayment Options
Look for loans allowing extra repayments without penalties. During high-earning periods, you can pay more to reduce your loan balance faster.

Redraw Facilities
This allows access to extra repayments you've made, providing financial flexibility between roster periods.

Choosing the Right Lender Package

With access to Home Loan options from banks and lenders across Australia, comparing packages is essential. Some lenders offer professional packages with reduced fees and interest rate discounts for qualified borrowers.

Package benefits often include:

• Reduced variable interest rates
• Waived application fees
• Discounted or waived annual fees
• Access to offset accounts
• Fee-free credit cards

Getting Pre-Approved

Before house hunting, get pre-approved to understand your borrowing capacity. This involves providing bank statements, payslips, and employment contracts. For FIFO workers, lenders typically require:

• 12-24 months of employment history
• Evidence of contract renewals
• Bank statements showing consistent income deposits
• Tax returns demonstrating stable earnings

The application process for FIFO workers requires demonstrating income stability despite the unconventional work pattern. A streamlined application process through experienced brokers can help present your financial situation in the optimal light to lenders.

Making Your Property Investment Decision

Whether buying your primary residence or considering your first investment property, understanding the property market in your target area is crucial. Investment loan options typically carry higher interest rates and different lending criteria than owner-occupied loans.

For your first investment property, lenders often require larger deposits and charge higher rates. However, the tax benefits and potential capital growth can make property investment attractive for high-income FIFO workers.

Working with mortgage brokers who understand the FIFO industry ensures you access to banks and lenders nationwide who appreciate your employment type. This expertise can mean the difference between loan approval and rejection.

Ready to explore your home loan options? Call one of our team or book an appointment at a time that works for you. Our specialists understand the unique challenges FIFO civil engineers face and can help you find the right loan structure for your situation.