What Are the Home Loan Structure Options for FIFO?

If you work FIFO as a mobile plant operator, your loan structure matters as much as your rate. The way you set up your home loan decides how much flexibility you get when your roster, site or income changes.

Most people focus on the headline number. Fair enough, but two loans with the same interest rate can behave very differently depending on how they are built. This guide walks through the main structure choices so you can sit down with a broker and know what to ask for.

What Are the Main Home Loan Structure Options?

The main choices are variable rate, fixed rate or a split of both, then principal and interest or interest only repayments, and whether you add an offset account. Each one trades flexibility for certainty, or the other way around.

A variable rate moves when your lender changes it, so repayments can rise or fall. A fixed rate locks your repayment for a set period, but extra repayments are often capped and breaking the loan early can cost you. Which suits you depends on how much you value certainty on your pay cycle versus room to move.

If you are still working out the basics, our page on mortgages for FIFO workers covers how lenders view roster-based income.

Variable, Fixed or Split Rate: Which Suits a FIFO Roster?

A split rate puts part of your loan on a fixed rate and part on a variable rate, so you get some certainty and some flexibility. It suits people who want predictable repayments on one portion while still being able to pay extra on the other.

The trade-off is that you carry two loan balances, and the fixed portion usually has limits on extra repayments and may have break costs if you pay it out early. Fixed rates also end, and the loan then rolls to a new rate unless you act. Our fixed rate expiry page explains what to do before that date arrives.

As an example, consider an operator on a two-and-one roster who gets a bonus or overtime in some months and a quieter pay in others. They might fix half the loan so a base repayment is locked in, and keep the other half variable so the big pay months can go straight onto the loan without penalty. In a scenario like this, the operator gets a repayment they can plan around, plus a place to put the extra cash.

How Does an Offset Account Work on a Home Loan?

An offset account is a transaction account linked to your loan. The balance in it is subtracted from your loan balance when interest is worked out, so you pay interest on a smaller amount.

This suits FIFO workers well, because money often builds up while you are on site with few chances to spend it. Instead of sitting in a low-interest savings account, that cash works against your loan while staying available to you.

The main cost is that loans with a full offset can carry a higher rate or an annual package fee, depending on the lender. It only pays off if you keep a decent balance in there.

Here is a worked example using an illustrative rate of 6.75% p.a. Say a borrower has a loan balance of $500,000 and keeps $50,000 in a linked offset. Interest is worked out on $450,000 instead. At 6.75% p.a., that is roughly $30,375 a year in interest rather than $33,750, a difference of about $3,375 a year, or about $281 a month. The rate is for illustration only and real rates vary by lender and loan. Because the money stays in your account, the saving comes without locking the cash away.

You can see how this works across your own numbers with a loan calculator, and our home loan refinancing page explains how to move to a loan with an offset if yours does not have one.

Interest Only vs Principal and Interest: What Changes?

With principal and interest repayments you pay off the loan as well as the interest. With interest only repayments you pay just the interest for a set period, so your repayment is lower but your loan balance does not fall.

Interest only periods are commonly used for investment property and are less common for owner occupied loans. When the period ends, repayments switch to principal and interest, and because the remaining term is shorter, the repayment is higher than it would have been from day one. You also pay more interest overall, and you build equity more slowly unless the property grows in value, which is not certain.

If you are thinking of an investment, our interest only loans for FIFO workers page covers this in more detail.

Does Your Loan Structure Affect Borrowing Capacity?

Yes, in some cases. Lenders assess your ability to repay using their own rules, so factors such as your loan term, the type of repayments and how your income is counted can change how much you can borrow.

For mobile plant operators, how a lender treats allowances, overtime and site-based pay can matter as much as the loan type. Different lenders treat these differently, so a broker comparing several can help. Our borrowing capacity page explains how this works for FIFO income, and the home loans for FIFO mobile plant operators page covers your role in particular.

Which Structure Should You Choose?

There is no single right answer. Start with what you want the loan to do: give you certainty, give you flexibility, or keep repayments low while you build savings.

Some questions to put to a broker: how much extra can you repay on the fixed portion, what does the offset cost per year, and what happens when a fixed or interest only period ends. Knowing those answers before you apply for a home loan means fewer surprises later.

Call one of our team or book an appointment at a time that works for you. We will build a loan structure around your roster, your pay and your goals.

Frequently Asked Questions