What Not to Do When Your Interest Rate Feels High

Your rate might feel high without actually being uncompetitive for your situation.

Midwives often carry shift penalty income, rotating rosters, and employment structures that don't fit neatly into standard serviceability models. That complexity can result in a rate that looks elevated compared to advertised headline figures, even when the loan itself is priced appropriately given how it was structured. The issue isn't always the rate you're paying. Sometimes it's whether you're still in the loan product that made sense when you first borrowed, or whether your circumstances have changed enough to justify a different approach.

Compare Your Rate to What You'd Qualify for Today, Not What's Advertised

Your current rate should be measured against what you could access now with the same deposit, income structure, and loan amount, not against the lowest advertised rate in the market.

Consider a midwife who took out a loan three years ago with a 10% deposit and penalty-loaded income documented through payslips and rosters. That loan might sit at 6.4% variable today. Advertised rates for owner-occupiers with 20% equity might be closer to 5.9%, but those products assume clean employment income and no lender's mortgage insurance. If that midwife now has 15% equity and a more stable roster pattern, she might qualify for a rate around 6.1% with a different lender. That's a genuine reduction. But if her equity hasn't moved and her income is still documented the same way, the 6.4% rate might reflect appropriate pricing for her risk profile, not a lender taking advantage.

We regularly see midwives assume their rate is high because they're comparing it to products they don't qualify for. The question isn't whether a lower rate exists somewhere in the market. It's whether a lower rate exists for someone with your deposit, income type, and loan purpose. A loan health check will answer that without requiring a full application.

What Actually Drives Your Rate Beyond the Cash Rate

Your rate is determined by your loan-to-value ratio, how your income is assessed, and whether your lender still sees you as the same risk they priced for originally.

A midwife working in a public hospital with a base salary plus 20% shift penalties and a loan at 85% LVR will be priced differently to someone on a salaried nurse practitioner contract at 70% LVR. The cash rate sets a floor, but your rate is built on top of that using your equity position, how much of your income can be serviced at full value, and whether the lender applies a loading for casual or shift-based income. If you've paid down your loan or your employment has shifted from casual to permanent part-time, your risk profile has improved. Your rate should reflect that, but it won't adjust automatically. You need to either negotiate with your current lender or move to one that will reprice you based on where you sit now.

In our experience, midwives who refinanced within two years of their original loan often did so because their LVR had dropped below 80% and they could access standard pricing without lender's mortgage insurance affecting the rate. That's not about chasing the lowest rate in the market. It's about moving into a different pricing tier that reflects lower risk.

When a Rate Feels High Because the Loan Structure Has Expired

If you fixed your rate during the low-rate period and have recently reverted to variable, your repayments will have increased even if your current variable rate is priced correctly.

A midwife who fixed at 2.1% in late 2021 and reverted to a variable rate around 6.2% in late 2024 will have seen her repayments jump significantly. That doesn't mean the 6.2% rate is high for current conditions. It means the contrast is sharp. The instinct is often to refinance immediately, but if that variable rate is within 0.2% of what she'd get elsewhere after comparing her actual serviceability and LVR, the cost of refinancing might outweigh the benefit. Discharge fees, application fees, and valuation costs can add up to $1,500 or more. Saving 0.15% on a $500,000 loan is roughly $750 a year. It would take two years just to recover the switching cost.

If your fixed rate has recently expired, the first step is to find out what rate you'd access elsewhere before assuming your current lender is overcharging. Some lenders will negotiate a retention rate if they know you're comparing properly.

How to Work Out if Refinancing Will Actually Reduce What You Pay

Refinancing makes sense when the rate reduction covers the cost of switching within 12 months and you're not giving up features you're using.

Calculate the annual saving by multiplying your loan balance by the rate difference. If you're currently at 6.3% on $450,000 and you've been offered 5.95% elsewhere, that's a 0.35% difference. Multiply $450,000 by 0.0035 to get $1,575 per year, or roughly $131 per month. If the cost to refinance is $1,200 in fees and discharge costs, you'll recover that in under 10 months. That's a clear case for switching. But if the difference is 0.1% and you're paying $1,500 to switch, the saving is only $450 per year. It will take more than three years to break even, and by then rates may have moved again.

We regularly see midwives chase a lower rate without checking whether their current loan offers an offset account or redraw that they're actively using. Some lower-rate products don't include those features. If you're using an offset to park your savings and reduce interest, switching to a product without one might cost you more than the rate difference saves. The math has to account for what you're losing, not just what you're gaining. Refinancing for midwives should improve your position across repayments and functionality, not just one or the other.

Why Some Midwives Pay More Without Realising Their Income Could Be Assessed Differently

If your income was originally assessed using a discounted penalty rate or casual loading, but you've since moved to a more stable roster or higher base, you may now qualify for a lower rate with a lender that assesses your income differently.

Midwives working rotating rosters or holding multiple part-time contracts sometimes have their penalty income shaded by 20% to 30% during serviceability assessment. That affects how much you can borrow, but it can also push you into a higher-risk pricing tier. If your roster has become more predictable, or you've consolidated contracts into a single employer, some lenders will now assess that income at full value. That doesn't just increase your borrowing capacity. It can also lower your rate, because the lender sees your income as more reliable.

A midwife we worked with had been paying 6.5% on a loan originally written when she was casual across two hospitals. After 18 months, she moved to permanent part-time at one site with a guaranteed minimum roster. Her income level hadn't changed, but the way it could be assessed had. She refinanced to a lender that accepted her income at 100% and her rate dropped to 6.0%. That's a $2,250 annual saving on a $450,000 loan, and it happened because her employment structure changed, not because she paid down the loan or found a better advertised rate. If your income profile has shifted, your loan should be repriced to match.

Call one of our team or book an appointment at a time that works for you. We'll compare your current rate against what's available for your actual income, equity, and loan structure, and tell you whether switching makes sense or whether you're already where you should be.

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