Smart ways to compare fixed, variable and split loans

As a FIFO heavy diesel mechanic, buying your first home represents a major milestone in your career. Your unique work situation means understanding different loan structures becomes even more important when applying for a home loan. Let's break down the three main interest rate options available when you're ready to make that property purchase.

Fixed Interest Rate Loans

A fixed interest rate locks in your repayments for a set period, typically between one to five years. During this time, your interest rate won't change regardless of what happens in the broader property market.

Key benefits for FIFO workers:
• Predictable repayments that align with your roster schedule
• Protection against interest rate rises during the fixed period
• Clearer budgeting for your financial situation
• Peace of mind when you're away on site

The loan amount you can borrow remains consistent throughout the fixed period, making it easier to plan your finances around your FIFO income patterns. Many lenders mortgage insurance (LMI) calculations also become more straightforward with fixed rates.

Variable Interest Rate Options

Variable rates fluctuate based on market conditions and your lender's decisions. While this means your repayments can go up or down, it also offers more flexibility in your loan structure.

Advantages include:
• Access to features like offset accounts to reduce interest payments
• Ability to make extra repayments without penalties
• Potential interest rate discounts as market conditions change
• More loan package options available

For FIFO workers with irregular income timing, variable loans often provide the flexibility needed to manage repayments around your work schedule. The borrowing capacity calculations may also work in your favour with certain lenders.

Split Loan Arrangements

Split loans combine both fixed and variable portions, typically dividing your total loan amount between the two rate types. This approach lets you enjoy benefits from both structures while managing different aspects of your financial commitments.

How splits work for first time home buyers:
• Part of your loan stays at a fixed rate for stability
• The variable portion provides flexibility and feature access
• You can adjust the split ratio based on your comfort level
• Different loan to value ratio (LVR) requirements may apply to each portion

Many FIFO workers find split arrangements particularly suitable because they can fix a portion that covers their basic living expenses while keeping flexibility for the remainder.

Choosing the Right Option for Your Situation

When buying your first home as a FIFO heavy diesel mechanic, consider these factors:

Income Stability: Your roster patterns and contract length influence which rate type suits your circumstances. Fixed rates work well when you want certainty, while variable rates suit those comfortable with some fluctuation.

First Home Owner Grants (FHOG): These government incentives can be accessed regardless of your chosen interest rate structure. The same applies to first time home buyer programs and schemes like the Home Guarantee Scheme.

Stamp Duty Considerations: Your rate choice doesn't affect stamp duty calculations, but it does impact your ongoing repayment capacity.

Future Plans: If you're considering your first investment property down the track, starting with a loan structure that offers flexibility might serve you well.

The Application Process

Getting pre-approved involves similar documentation regardless of your chosen rate type. You'll need bank statements, employment contracts, and evidence of your FIFO income patterns. The streamlined application process becomes more important when you're working away from home.

Access to banks and lenders nationwide means you're not limited to institutions in your local area. Many lenders now understand FIFO work patterns and have developed first time home buyer schemes specifically designed for workers in your industry.

Investment loan options also follow similar principles if you decide to expand your property portfolio later. The foundation you build with your first home loan often influences your future investment loan application success.

Understanding these three loan types puts you in a stronger position when buying a home. Each option serves different needs, and the right choice depends on your personal financial situation, risk tolerance, and long-term goals. Whether you choose fixed, variable, or split arrangements, the key is matching your loan structure to your FIFO lifestyle and financial objectives.

Call one of our team or book an appointment at a time that works for you to discuss which loan structure aligns with your FIFO work schedule and home buying goals.