The easiest way to upsize for your growing family

When you need more bedrooms and another bathroom, the loan that got you into your first home won't cut it.

You're borrowing more, your income structure is different to what lenders usually see, and you need a loan that works when you're on site for weeks at a time. The difference between a workable loan and one that costs you thousands is in how it's structured from the start, not just what rate you're offered.

Your borrowing capacity depends on how income is assessed

Lenders treat FIFO income differently. Some will only count your base rate. Others will include allowances at 80% or 100% depending on how consistently they appear in your payslips. The variation between lenders can shift your borrowing capacity by $100,000 or more.

You need a lender that understands your pay structure. If you're regularly pulling $140,000 to $160,000 with allowances, and a lender only recognises $110,000 of it, you're locked out of properties you can comfortably afford. This becomes critical when you're upsizing, because the loan amount matters more than it did when you were buying your first place. Brokers who work with FIFO clients regularly know which lenders assess your full income without discounting it arbitrarily.

Your existing property also plays a role. If you're selling before you buy, your borrowing capacity is straightforward. If you're keeping it as an investment property, the rental income offsets some of the debt, but lenders will only count 80% of the rent and you'll be servicing two loans at once. That calculation needs to be worked through before you start looking at properties.

Fixed or variable rate when you're borrowing more

You're taking on a larger loan amount, so the rate type you choose has a bigger dollar impact than it did on your first loan. A fixed rate gives you certainty, but you're locked in. A variable rate gives you flexibility, but your repayments move with the market.

A split loan lets you fix part of the loan and keep part variable. You get some certainty on repayments, and you still have the ability to make extra payments on the variable portion without penalties. This works well if your income allows you to pay more during high-earning swings, or if you want an offset account linked to the variable portion to reduce interest while keeping access to your cash.

If you fix the whole loan and rates drop, you're stuck paying more unless you're willing to cover break costs. If you go fully variable and rates climb, your repayments go up immediately. The split approach gives you a middle ground that most FIFO workers find more workable over the life of the loan.

Using equity from your current property

If you've owned your home for a few years and it's gone up in value, you might have enough equity to use as a deposit on the new place without selling first. Lenders will typically let you borrow up to 80% of your current property's value. Anything above that and you're paying Lenders Mortgage Insurance again, which on a large loan amount can run into tens of thousands.

Consider a diesel mechanic who bought a home for $450,000 a few years back. It's now worth $550,000, and the loan sits at $380,000. That gives $70,000 in usable equity at 80% LVR. If the new property needs a 10% deposit, that equity covers it without needing to sell. The mechanic keeps the first property, rents it out, and services both loans using a combination of rent and FIFO income.

This only works if your income can support both loans and you're comfortable with the risk of holding two properties. Lenders will assess your ability to service both, and if the numbers don't stack up, you'll need to sell the first property before you can proceed. An equity release loan structures this properly so you're not caught short at settlement.

Offset accounts reduce interest without locking up cash

An offset account sits alongside your home loan and reduces the interest you're charged based on the balance you hold in it. If you have $30,000 sitting in offset and your loan is $600,000, you're only charged interest on $570,000. You still have access to the $30,000 whenever you need it.

This works well for FIFO workers who get paid in lump sums and need access to cash between swings. Your pay hits the offset account, reduces your interest for the time it's sitting there, and you draw it down as needed. Over the life of the loan, it can save you years of repayments without requiring you to commit extra funds permanently.

Not every loan product includes an offset account, and some charge extra for it. If the annual fee is $300 but you're saving $3,000 a year in interest because you keep a decent balance in there, it's worth it. If you rarely keep more than a few thousand in the account, the fee outweighs the benefit and you're losing money for a feature you're not using.

Portable loans let you move without refinancing

A portable loan means you can take the loan with you to a new property without reapplying or paying discharge fees. If you're upsizing now but think you might move again in a few years, portability gives you flexibility.

Without portability, you'd need to discharge the loan on the old property, pay exit fees, and apply for a new loan on the next property. That means another round of applications, valuations, and potential rate changes. If your circumstances have shifted or lending has tightened, you might not get the same deal you had before.

Not all lenders offer portability, and it's not always automatic. It needs to be written into the loan from the start. If you're planning to upsize again as your family grows, or you're in an area where you expect to move within five years, it's worth asking for.

Getting pre-approval before you look

Pre-approval tells you what you can borrow before you start looking at properties. It's not a guarantee, but it gives you a realistic budget and shows sellers you're serious when you make an offer.

For FIFO workers, pre-approval also confirms that the lender will accept your income structure and any rental income from your current property if you're keeping it. You don't want to find a property, put in an offer, and then discover the lender won't count your allowances the way you expected.

Pre-approval is usually valid for three to six months. If you're still on site and planning to buy when you're next home, get it sorted while you're away so you can move quickly when you're back. Properties that suit growing families don't sit on the market long, and having your finance locked in gives you an edge over buyers who are still working out what they can afford.

Refinancing your existing loan to increase borrowing capacity

If your current loan is with a lender that doesn't recognise your full FIFO income, refinancing to a lender that does can increase your borrowing capacity without changing your actual income. This can be the difference between affording the property you need and settling for something smaller.

Refinancing also lets you restructure your debt. If you're keeping your current property as an investment, you can refinance it to interest-only to reduce the repayments, then put the savings toward the new loan. You're not building equity on the investment property, but you're freeing up cash flow to service the larger owner-occupied loan.

Refinancing has costs. You'll pay for a valuation, and possibly discharge fees on the old loan and application fees on the new one. If the rate you're moving to is lower or the lender will count more of your income, the upfront cost is usually recovered within the first year. If the difference is marginal, it might not be worth the hassle.

You need a loan structure that matches your income, your family's needs, and how long you plan to stay in the property. Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions