As a single parent, nothing feels better than having a place you and your kids can call home. Single-parent home loans are designed to make it easier for parents in this category to buy and own property.
Kids are already expensive, and so is buying a home. So it is not strange for single parents to believe owning a home in Australia is out of their reach.
The truth is, it is possible to get a home loan on a single income as an Australian citizen; however, you must be ready to put in some work.
This article will explore different single-parent home loans schemes and highlight different tips to guide you to get these loans.
Related Articles
- The Best Suburbs in Melbourne For Families
- How to Choose the Perfect Family Home
- How to Avoid Stress As An Unmarried Couple Buying a House
Single parent home loans
Even though there are no home loans specifically designed to cater to single parents by the national housing finance department, there are some government-funded schemes that you can use to purchase your first home.
Some of these schemes are:
The family home guarantee scheme
The Australian government uses the family home guarantee scheme to support single parents to buy a home for their families. About 10,000 single parents with dependents will benefit from this family home guarantee scheme which started on 1st July 2021.
With the family home guarantee scheme, single parents can buy a home with as little as a 2% deposit with no accompanying lenders mortgage insurance (LMI) payment. It is an excellent home owner grant for home buyers who struggle to pay the huge 20% deposit when trying to avoid paying lenders mortgage insurance.
The family home guarantee scheme is open to both first-time home buyers and single parents who have previously owned a home. This scheme cannot be used to purchase an investment property by any investment corporation.
To be eligible for the family home guarantee scheme, you must;
- Be single
- Be at least 18 years old and an Australian citizen
- Have one or more dependent child
- Plan to live on the property
- Have earned $125,000 (not including child support) or less in the previous financial year.
With this home loan scheme, you can purchase
- an existing home, residential property, or townhouse
- a piece of land with the house as a packaged deal
- a separate land and contract to build.
First home loan deposit scheme
This home loan is similar to the family home guarantee scheme. However, you have to afford a 5% deposit in this instance, and you won’t be required to pay the lenders mortgage insurance.
The first home loan deposit scheme started on 1st July 2021 and will be on until 30th June 2022 with the aim of helping 10,000 single parents purchase their first home.
Beneficiaries would be able to purchase the same kinds of properties as those provided in the family home guarantee scheme.
Centrelink Income
Eligible single parents may be able to use Centrelink parenting payment as a form of payment, as many mortgage brokers accept it.
If you are eligible for the childcare benefit and receive child support payments, these can also be accepted as a single parent payment by many lenders.
Depending on how old your kids are and your income, you may be eligible for the family tax benefit from the federal government.
How to apply for single parent home loan
As long as you tick every single parent home loan eligibility requirement, then applying is the easy part. You will speak to your banker and apply for conditional approval.
This simply means your application has been reviewed by a relevant credit provider and has been accepted. However, it is still yet to be fully approved.
Once you have conditional approval, you can start looking at homes or lands with confidence, as you will get the final approval in no time if there are no issues.
Helpful tips for single parents trying to own a home
If you want to know how to get a home loan as a single parent with a dependent child, these tips will put you on the right path and help you purchase a new home for your family in no time.
Use the schemes
Do your research and find out which scheme will work best for you. These schemes were designed to take some of the load off your shoulders by removing the main barrier that stops people from purchasing homes.
Even in a good economy, a 20% deposit is hard to come by. So take advantage of these schemes so you and your babies can have a home.
Save as much as you can
A mortgage is a long-term commitment that can last up to 30 years. Your kids will be grown and probably out of the house by this time.
You should try to save as much as possible, whether to make early and extra repayments, have an offset account, and still have emergency funds stashed away.
It is always a good idea to develop a healthy saving habit when you are on a mortgage. Go over your finances and see where you can make budget cuts. You can also try automated savings plans to improve your saving habit.
Have and maintain good credit
When you want to buy a home on a low income in the housing market, your credit score will determine how far your application goes.
A good credit score gives you a wide option of lenders to choose from and also give you good loan terms.
If your credit score is bad, you may be charged a higher interest, causing you to spend even more money over time.
Don’t overextend yourself.
Single parent home loans help a lot, but it isn’t an avenue for you to over-extend yourself with your home ownership and buy a home that is a lot to handle.
If you are not so financially strong at the moment, it is wise to choose a property that isn’t so expensive. This may mean getting a small apartment with ample space instead of a three-bedroom home with a yard.
Find out your borrowing power, and be sure you can comfortably settle your mortgage payments without stress.
Liked our guide on home loan assistance?
Keep yourself updated with useful tips like these by downloading our app for the full Soho experience.
Not only are we finding you your dream home, but also offering Soho Home Loans to help you kickstart the financing process. So get in touch with us!
