Single parents looking for ways to afford a home need to think about as many ways as possible to earn more cash
Saving to afford a home is a difficult enough task for two people. Even more so when a couple have a dependent child. But what about single parents raising a child at the same time. How can a single parent afford a home?
The home loan lender is interested in your capacity to repay the loan. Even with financial assistance, like parenting payments, you need to work if you want a mortgage.
If you’ve got an income, then there’s no reason why you can’t get a home loan. The question is how much you can borrow as a single income household. Many home loan lenders will accept an application from a single parent. The usual home loan eligibility criteria applies: a deposit is required, it’s good if the borrower can show a history of savings, and the borrower needs to have an income. You can read more about the application and eligibility requirements on our home loan review and application pages.
We’ve listed some tips and ideas below for single parents who want to increase their income and saving for a home loan.
Compare mortgage brokers
Mortgage brokers have an intimate knowledge of which lenders to approach to obtain a home loan for a single parent. They'll know which lenders will accept government assistance as a source of income, and will help you work out how much you'll realistically be able to borrow to avoid you being rejected for a loan. Best of all, mortgage brokers generally obtain a commission from the lender, so it's a free service to consumers. You can compare brokers below, and if you're interested, you can click 'Enquire' to lodge an obligation-free enquiry.
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Aussie Home Loans
Aussie is one of Australia's leading financial service providers, having won The Adviser’s Top Mortgage Broker award for the last 3 years. They charge no appointment fees and can meet at a time and place which suits you.
Tips for single parents who want to afford a home
Saving for a deposit for a home and raising a child on a single income is a marathon exercise. And the costs of both raising a child and saving for a home are increasing. Take note of the following if you're looking for ways to save for a home and you're the provider for a dependant child.
- Government assistance. Single income parents may be eligible for the federal government’s Family Tax Benefit A & B, Parenting Payment and the Child Care Benefit. Government assistance can help cover the incidental day to day expenses and larger expenses like rent and child care, which can give you a little more room in the budget to save.
- How much do you earn? When it comes time to apply for your home loan, you will want to know how much you can borrow. A higher income means you can borrow more. Pre-approval will give you a ball-park figure, once you’ve done a comparison of home loans, speak to the lender directly to find out whether parenting related payments can be included on your home loan application. There are other Centrelink benefits available to single parents. Read more about applying for a home loan on Centrelink payments.
- Increase your income. This is an obvious one, and something which is by far easier said than done. We covered off some possible ideas for increasing your income in our 12 week challenge. Although these solutions are not for everyone, renting out a spare room on a website like ‘AirBnB’ is a serious money maker.
- Budgeting. A budget is essential to any financial plan. List all the money you get, your income, and look at ways to cut down on the money going out. You can find out about how to make a successful budget in our 12 Week Financial Fitness Challenge.
- Get a savings account. Although the first home saver accounts scheme is no longer in operation, high interest savings accounts are great if you’re saving for a goal, like a mortgage deposit. Not only are these accounts interest bearing — you get money back on the money you deposit in the account — they also come with features to help you save. Automatic savings plans are a great way to save for a goal.
- Get the right home loan. Spend some time comparing home loans and find the loan that’s the right fit. The right loan charges less fees and gives you flexibility to change the features as your situation changes in the future. A comparison of fees vs features now will save you time and money later.
If homeownership is not your aim, and you want to rent, there are a number of social housing services that provide cheap accommodation for single parents. The Community Housing Assistance website has details about the concessions available to single parents and contact information for the different schemes operating in each state.
A dual income household can borrow more money than a single parent. But single parents can still get access to housing finance. The issue is borrowing power. High income earners have greater access to housing finance. Compare loans and speak to lenders to find out whether they can help a single parent afford a home.