Understanding the mistakes of first home buyers in FIFO

As a FIFO Fixed Plant Operator, you've worked hard to build your savings and are ready to take the plunge into homeownership. However, buying your first home comes with unique challenges, especially when you're working in the FIFO industry. Let's explore the most common mistakes first-time buyers make and how you can avoid them.

Not Understanding Your True Borrowing Capacity

One of the biggest mistakes FIFO workers make is overestimating their borrowing capacity. Your income structure is different from traditional 9-to-5 workers, and many lenders don't fully understand how FIFO income works. Banks typically want to see consistent income over time, but your pay can vary based on:

• Roster patterns and swing lengths
• Overtime availability
• Site shutdowns and maintenance periods
• Contract renewals

Before you start looking at properties, get a realistic assessment of what you can actually borrow. This means working with someone who understands FIFO income patterns and has access to banks and lenders nationwide that specialise in FIFO lending.

Skipping the Pre-Approval Process

Many first-time buyers make the mistake of house hunting before getting pre-approved for their home loan. This can lead to disappointment when you find your dream home but can't secure finance quickly enough.

When you get pre-approved, you'll know exactly what loan amount you can access, which helps you:

• Set a realistic budget
• Show sellers you're a serious buyer
• Move quickly when you find the right property
• Understand what interest rate you'll likely pay

Ignoring Additional Costs Beyond the Purchase Price

The property's purchase price is just the beginning. Many first-home buyers forget about the extra costs that can add tens of thousands to their budget:

• Stamp duty (though some states offer concessions for first-home buyers)
• Building and pest inspections
• Legal fees and conveyancing
• Lenders mortgage insurance (LMI) if your loan to value ratio (LVR) is above 80%
• Moving costs and immediate repairs or improvements

Make sure you factor these into your financial situation when determining how much you can afford to spend.

Not Researching First Time Home Buyer Schemes

Australia offers several first time home buyer programs and schemes that can help you enter the property market sooner. The Home Guarantee Scheme, for example, allows eligible buyers to purchase with as little as 5% deposit without paying LMI.

Different states also offer first home owner grants (FHOG) and stamp duty concessions. The benefits and eligibility criteria vary, so research what's available in your target area. These packages can save you thousands of dollars.

Choosing the Wrong Loan Structure

Not all home loans are created equal, especially for FIFO workers. You need to consider:

Interest Rate Type: Variable interest rates offer flexibility and potential savings when rates fall, while fixed interest rates provide certainty for budgeting during your time away.

Features: An offset account can be particularly valuable for FIFO workers who accumulate savings during swings. This allows you to offset your loan balance and reduce interest payments.

Lender Understanding: Some lenders are more FIFO-friendly than others. Working with brokers who have access to Home Loan options from banks and lenders across Australia means you're more likely to find suitable products.

Rushing the Property Search

The property market can feel overwhelming, and many first-time buyers make hasty decisions. Take time to research different areas, considering factors like:

• Proximity to airports for your FIFO travel
• Growth potential and resale value
• Local amenities and lifestyle factors
• Whether you might want investment loan options in the future

Remember, this is likely to be your home for several years, so don't rush the decision.

Not Getting Professional Help

Trying to handle the entire home loan application process alone is often a costly mistake. The application process can be complex, especially when you have FIFO income. Banks may request extensive documentation including:

• Multiple months of bank statements
• Employment contracts and roster information
• Tax returns and payment summaries
• Details about your specific role and income stability

Professional mortgage brokers who understand the FIFO industry can help streamline the application process and ensure you're getting suitable interest rate discounts and loan features.

Your first home purchase doesn't have to be overwhelming. By avoiding these common mistakes and working with professionals who understand your unique circumstances as a FIFO worker, you can make informed decisions that set you up for long-term success.

Call one of our team or book an appointment at a time that works for you to discuss your first home loan options.