How can Single Parents in Australia get approved for a Home Loan

Managing children single-handedly on top of all of life’s other challenges is one of the biggest and most important tasks that a single parent will ever face.

According to the latest statistics, there has been an increase of 8% in single parent households over the last five years. Although the greatest increase was in the number of male single parents, women still outnumber them by accounting for as many as eight out of ten single parent families.

When you go from being a dual income household to single, you face multiple challenges (not just financial) so the goal of home ownership might become too lofty a goal for most.

If you are a single parent looking and you are currently employed, you can apply for the Family guarantee home loan scheme which only requires a 2% deposit.

How much can a single parent borrow?

There is no simple answer or formula to share here since there are kids to include as dependants, however the first thing to do is to get an assessment carried out by the professionals.

How do I get an assessment done?

Engage a mortgage broker – We are specialists who not only can run an assessment on your borrowing capacity, but we can also recommend the correct lender and product and assist you with the application process for the family guarantee scheme.

What about my credit history?

We recommend that you build and maintain a great credit score however this may not always be the case for many borrowers. Everyone makes mistakes and there is no shame in this.

Most people look at this process of digging up past mistakes as a negative part of their lives that they want to ignore. From our point of view, we need to address the ‘elephant in the room’ if we are going to work out how to get around it. There is always a way, and it is our job to help you find that way or at least show you the direction and pathway you need to take to get to your goal of home ownership.

Government assistance – If you are eligible or receiving the federal government’s Family Tax Benefit A & B, Parenting Payment and the Child Care Benefit, a lot of lenders accept this as part of your income to service the loan.

Increase your income – When was the last time you asked for a raise? If it is more than 12 months, now is the time. Let them know that you are looking to get a home loan. It shows your employer that you are committed and the chance of you leaving will be decreased. 

How can I prepare for the process?

Budget – Budgeting is a must-do exercise if you wish to get a home loan and maintain it. It will help you plug all the holes and help you see where you may be wasting money and what you can cut back to increase your savings.

Savings Account – Since rates are on the rise now, we are starting to see higher savings accounts /products trickle through. High interest savings accounts help you save for a goal. Saving plans such as a direct debit into a savings account from your salary is a great way to stop unnecessary expenses.

Finding the right home loan – A broker will research and find out the right home loan plan for you. Choose one that charges lower fees and offers the flexibility to change the features, if needed.

Find out how much you can borrow – This is essential because it gives you an idea of how much you need to save and how much you have to repay.

What are the advantages of the family guarantee scheme?

  1. You can buy a property with a 2% deposit
  2. You are treated like you have a 20% deposit which means you have better interest rates than people with e.g 10-19%
  3. You don’t have to pay lenders mortgage insurance (LMI)
  4. The government will stand guarantor for you with the banks

Rent assistance – If at the end of it, you are not in a position to afford a home loan now, that does not mean this will be the case forever. Start putting in a plan of attack now, if you need help with this and want to start your journey contact us at [email protected]

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button