Why Should Nurses Consider a Fixed Rate Home Loan?

A fixed rate home loan locks your interest rate for a set period, so your repayment stays the same while the fixed term runs. For nurses and midwives on rotating rosters, that certainty can make budgeting easier to plan around. It also comes with trade-offs that are worth knowing before you sign.

What Is a Fixed Rate Home Loan?

A fixed rate home loan holds your interest rate at one level for an agreed period, often between one and five years. When that period ends, the loan moves to a rate set by your lender unless you choose a new option.

With a variable rate, your lender can change the rate at any time, and your repayments move with it. With a fixed rate, the repayment stays put for the fixed term. If you are a nurse or midwife buying your first home, that can help when your income includes shift loadings and penalty rates that change from fortnight to fortnight. You can compare the structure of each option on our home loans for nurses page.

How Fixed Rate Repayments Work: An Illustrative Example

On a fixed rate, your repayment is calculated from your loan amount, your rate and your loan term, and it does not change during the fixed period. As an illustration only, at an example rate of 6.75% p.a., a $600,000 loan over 30 years on principal and interest has a repayment of about $3,891 a month.

If the rate on a variable loan rose by 1 percentage point to 7.75% p.a., the same loan would cost about $4,298 a month. That is roughly $407 more each month. A fixed rate would have shielded you from that rise during the fixed term. The reverse is also true. If variable rates fell, you would still pay your fixed rate until the term ended.

These figures are examples, not a quote. Actual rates depend on your deposit size, your lender and the loan product. Use a repayment calculator to test your own numbers.

Fixed Rate Trade-Offs: Extra Repayments and Break Costs

The main costs of fixing are limits on flexibility. Many fixed loans cap the extra repayments you can make each year, and they may not offer a full offset account. Exiting early can trigger break costs.

Break costs depend on your lender, the remaining term and how rates have moved since you fixed. If you sell, refinance or pay the loan out during the fixed term, the cost can be significant. If you expect to move within a few years, for example for a rotation, a transfer or a new role in another city, this matters a lot. Ask about break costs and extra repayment caps before you choose a lender.

Should You Fix Your Entire Loan or Use a Split Rate?

A split rate loan divides your balance into a fixed portion and a variable portion. It gives you some repayment certainty while keeping part of the loan open to extra repayments and an offset account.

Consider a midwife buying her first home who works a mix of day and night shifts and wants predictable repayments. She also picks up extra shifts and wants to put that pay against the loan. Her broker suggests fixing half the loan and keeping half variable. The fixed half gives her a steady base repayment. The variable half lets her make extra repayments from her additional shift income with no cap and use an offset account. The outcome is a repayment she can plan around, plus a place to direct bonus pay.

The trade-off is that the variable half still moves with rate changes, so your total repayment is only partly protected. You can also review what happens when the fixed portion ends on our fixed rate expiry page.

How Does Your Income Affect Your Fixed Rate Loan Application?

Lenders assess your borrowing capacity using your income, expenses and debts, and shift loadings and overtime may be treated differently from base pay depending on the lender. How they are counted can change the loan amount you can access.

This is where working with a broker who understands nursing pay helps. Different lenders shade overtime, penalty rates and casual income in different ways. You can see how this works on our borrowing capacity page. If you want certainty before you start looking, getting loan pre-approval lets you search with a clearer budget in mind. Pre-approval is not a final approval, and it can lapse or change if your circumstances or the lender's policy change.

Can Nurses Avoid Lenders Mortgage Insurance on a Fixed Loan?

Some lenders waive Lenders Mortgage Insurance (LMI) for eligible nurses and midwives at up to 90 percent loan to value ratio (LVR), but policies differ by lender and change over time. A waiver is not available from every bank.

The Westpac Group (including St.George, Bank of Melbourne and BankSA) publishes an LMI waiver for registered nurses and midwives at up to 90 percent LVR, with a minimum income of $90,000, for owner-occupied and investment loans. Investment loans under that policy need principal and interest repayments. Other lenders, such as Granite, Bank First and People First, have their own limits and conditions. Some lenders, including ANZ, Bankwest and CBA, exclude nurses from their waiver offers. Policies can change, so always confirm current eligibility with the lender or your broker, because conditions such as income, loan size and employment history apply. Our LMI waivers for nurses page explains more.

The trade-off is that a waiver does not remove the risk of a higher loan. A higher LVR means a larger loan, bigger repayments and more interest over time.

When Does Fixing Suit a Nurse or Midwife?

Fixing tends to suit you when repayment certainty matters more than flexibility. That might be the case if you are on a single income, have a young family, or have little room in your budget if repayments increase.

It tends to suit you less if you plan to sell soon, want to pay the loan down quickly with extra shift income, or want a full offset account. A broker can compare fixed, variable and split options across many lenders, so you can weigh the cost of each. If you already hold a loan, our loan health check can show whether your current structure still fits.

Call one of our team or book an appointment at a time that works around your roster, and we will talk through fixed, variable and split options for your situation.

Frequently Asked Questions