As a FIFO worker looking at buying your first home, understanding the costs involved with variable rate loans can feel overwhelming. Between your unique work schedule and the complexity of home loan fees, it's important to know what you're dealing with before you apply for a home loan.
What Makes Variable Interest Rates Different
Variable interest rates change based on market conditions and lender decisions. Unlike fixed interest rate loans, your repayments can go up or down throughout your loan term. For FIFO workers, this flexibility can work both ways - you might benefit from rate drops, but you need to budget for potential increases too.
When you access home loan options from banks and lenders across Australia, you'll find that variable rates often come with more features than fixed rates. These might include:
• Offset account options to reduce interest charges
• Extra repayment facilities without penalties
• Redraw facilities for accessing extra payments
• Interest rate discounts for certain professions or loan amounts
Understanding the Fee Structure
Every lender has different fees, and as a first time home buyer, you need to factor these into your financial situation. Common fees include:
Application and Setup Costs
• Application fees (ranging from $0 to $600)
• Valuation fees ($200 to $500)
• Settlement fees ($150 to $300)
• Legal documentation fees
Ongoing Costs
• Monthly account keeping fees
• Annual package fees (if you choose a loan package)
• Offset account fees
• Extra repayment processing fees
Lenders Mortgage Insurance for FIFO Workers
If your deposit is less than 20% of the property value, you'll need lenders mortgage insurance (LMI). Your loan to value ratio (LVR) determines this cost. For a $500,000 property with a 10% deposit, LMI could cost between $8,000 to $15,000, depending on your lender.
Some lenders offer LMI waivers for certain professions, though FIFO workers aren't always included. However, having access to banks and lenders nationwide means you can find options that work for your situation.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at FIFO Home Loans today.
First Home Owner Benefits and Schemes
As a first time home buyer, you can access several government schemes:
First Home Owner Grants (FHOG)
Most states offer grants ranging from $10,000 to $25,000 for eligible first home buyers. Each state has different criteria and property value limits.
Home Guarantee Scheme
This federal scheme lets eligible first home buyers purchase with as little as a 5% deposit without paying LMI. The government guarantees up to 15% of the loan amount.
Stamp Duty Concessions
Many states offer stamp duty reductions or exemptions for first home buyers, potentially saving thousands of dollars.
How Your FIFO Income Affects Borrowing Capacity
Lenders assess your borrowing capacity based on your income stability and expenses. FIFO work can present challenges because:
• Income might be considered variable by some lenders
• Bank statements need to show consistent deposits
• Some lenders don't understand FIFO payment structures
Working with a mortgage broker who understands FIFO income patterns means accessing lenders who properly assess your situation. Your application process becomes more streamlined when lenders understand your work arrangement.
Choosing Between Variable Rate Packages
Many lenders offer loan packages that bundle home loans with other products. These packages might include:
• Credit cards with no annual fees
• Transaction accounts with no monthly fees
• Discounted insurance products
• Multiple offset accounts
While packages often have annual fees ($200 to $400), the included benefits might provide value depending on your needs.
Getting Pre-Approved as a FIFO Worker
Before you start seriously looking at properties, get pre-approved for your first home loan. This process involves:
- Gathering your financial documents
- Completing a detailed application
- Having your borrowing capacity assessed
- Receiving conditional approval
Pre-approval gives you confidence when making offers and shows sellers you're a serious buyer. In competitive property markets, this can make the difference between securing your dream home or missing out.
Managing Variable Rate Risk
Since variable rates can change, consider these strategies:
• Build a buffer into your budget for rate rises
• Make extra repayments when possible
• Consider an offset account to reduce interest charges
• Stay informed about economic conditions affecting rates
Some borrowers split their loans between variable and fixed portions, giving them stability while maintaining flexibility.
Understanding variable rate loan costs is just one part of your home buying journey. As a FIFO worker, you have unique circumstances that require specialised knowledge and access to the right lenders. The key is working with professionals who understand both your income structure and the current property market conditions.
Call one of our team or book an appointment at a time that works for you. We'll help you understand your options and find the right variable rate loan for your situation.
