Your fixed rate period ending can feel like a ticking clock, especially when you're working FIFO schedules and managing finances from remote locations. As a heavy diesel mechanic in the FIFO industry, you've got unique financial circumstances that require careful consideration when switching from a fixed interest rate to a variable interest rate.
Many FIFO workers rush into refinancing decisions without understanding the full picture. Here are four critical mistakes you need to avoid when making this switch.
Mistake #1: Not Getting a Home Loan Health Check First
Before jumping into any refinancing decision, you need to understand where you stand financially. A home loan health check reveals:
• Your current loan amount and remaining term
• How much equity you've built in your property
• Whether your financial situation has improved since your original application
• If you're eligible for special lender policies available to FIFO workers
As a finance & mortgage broker specialising in the FIFO industry, we see many mechanics who discover they have more options than they realised. Your regular FIFO income might qualify you for loan products that weren't available when you first bought.
Mistake #2: Focusing Only on Interest Rates
While accessing a lower interest rate is important, it's not the whole story. Variable interest rate loans offer flexibility that fixed loans don't:
• Option to make additional repayments without penalties
• Access to offset accounts to reduce interest payments
• Ability to redraw funds when needed (useful for equipment purchases or emergency travel home)
• Potential to change your loan term if your circumstances change
Your FIFO lifestyle means irregular expenses and varying income patterns. A variable rate loan can adapt to these changes, but only if you choose the right loan structure.
Mistake #3: Not Exploring All Your Options
Many FIFO workers stick with their current lender because they think it's the path of least resistance. This thinking costs you money. Mortgage brokers can access loan options from banks and lenders across Australia, including:
• Lenders who understand FIFO employment
• Products designed for shift workers
• Loans that consider your full earning potential
• Options for releasing equity in your property
Some lenders have specific policies for FIFO workers that make the application process more straightforward. Others offer features like split loans, where you can keep part of your loan fixed while switching the rest to variable.
Mistake #4: Trying to Handle Complex Paperwork Solo
The application process for refinancing involves extensive documentation. When you're on site for weeks at a time, gathering banks statements, payslips, and other required documents becomes challenging.
Working with mortgage brokers who understand FIFO schedules means:
• Someone else handles the paperwork coordination
• Applications continue processing while you're on site
• You get updates via phone or email when convenient
• Documents can be signed digitally, reducing delays
When Refinancing Makes Sense for FIFO Workers
Refinancing isn't just about switching rate types. Consider these scenarios:
Consolidate Debts: If you've accumulated credit card debt or equipment loans, refinancing can roll these into your home loan at a lower rate.
Release Equity to Buy the Next Property: Many FIFO workers build property portfolios. Refinancing can release equity to fund your next purchase.
Reduce Loan Repayments: Extending your loan term through refinancing can reduce weekly repayments, helping with cash flow during slower work periods.
Access Better Loan Features: Newer loan products often have features that weren't available when you first bought.
Understanding Variable vs Fixed Interest Rates
Variable rates move up and down with market conditions. This means:
• Your repayments can change
• You benefit when rates fall
• You pay more when rates rise
• You have more loan flexibility
Fixed rates stay the same for a set period, typically 1-5 years. Many FIFO workers prefer knowing exactly what they'll pay, but this certainty comes at the cost of flexibility.
Some loans offer split options – part fixed, part variable. This gives you some rate protection while maintaining flexibility for extra repayments.
The Right Time to Make Your Move
Timing matters when refinancing. Consider these factors:
• Current market refinance interest rates compared to your existing rate
• How long you plan to stay in your current property
• Your employment stability and future FIFO work prospects
• Whether you need access to equity for other investments
Don't wait until the last minute. Start exploring your options at least three months before your fixed rate period ending.
Getting Professional Help
As a FIFO heavy diesel mechanic, your time is valuable and often limited. Working with experienced mortgage brokers means you can potentially access a better interest rate and better loan options without the stress of managing the process yourself.
We understand the unique challenges of FIFO work – irregular schedules, remote locations, and the need for flexible financial solutions. Our streamlined application process works around your roster, not against it.
Call one of our team or book an appointment at a time that works for you. We'll review your current loan, check your eligibility for special lender policies, and help you avoid these costly refinancing mistakes.
