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What are my chances of acquiring a home loan if I'm a single parent?

What assistance is available to single parents when it comes to purchasing a home? Source: cottonbro from Pexels

You're a single parent wanting to secure a home for yourself and your children. Is this dream doable?

'May PERAan' is SBS Filipino's podcast series featuring financial experts seeking to answer the most common questions about money and finances.

 

"The prices of properties in Sydney and Melbourne have skyrocketed over the years and they will only get higher. Instead of paying rent, you can secure a house now so that you're assured that you have a roof over your head when you get older," financial expert Maria Papa shares.

Although now is an opportune time to purchase a home, is it actually doable for a single parent?

 

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May pag-asa ba na mag-qualify para sa home loan ang isang single parent?
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Highlights

  • If you're young and capable of earning more in the future, you're a good candidate for a home loan.
  • The Family Home Guarantee helps single parents acquire a home more easily.
  • Check your financial situation before committing to purchasing a home.

What will work in your favour

While being a single-income household isn't a plus when applying for a home loan, Maria shares that you should look at the factors that work in your favour.

"If you're young, you have a good stable job and you have career opportunities in the future that will increase your earning capacity...those make you a good candidate for a home loan."

The Family Home Guarantee

Aside from factors that make you a good candidate for a home loan, Maria shares that there is an initiative announced in the federal budget aimed at helping single parents acquire property.

"It's hard being a single parent, raising kids, paying rent and saving for a deposit for a home loan at the same time. That difficulty is being addressed by the government through the Family Home Guarantee."

In this scheme, you will be given a loan without needing to pay loan mortgage insurance. You only need a 2% deposit deposit as compared to the usual 20% to secure a home.

"So if you're purchasing a $600,000 home, you only need $12,000 deposit instead of $120,000. Also if this is your first home and it only costs $600,000 or less, you don't need to pay for stamp duty. Imagine that!" Maria exclaims.

Beginning July 1, 2021, 10,000 spots will be allotted to eligible candidates for the scheme. The spots will be staggered across four years.

"To be eligible, you need to be 18 years old and above, a single parent and earning less than $125,000 a year (this includes help from the government and child support)."

Currently, the two major lenders involved with the initiative are Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB).

Before committing to purchasing property...

While interest rates are at its lowest and there is support available to help with acquiring property, Maria shares that it's still important to do your research before diving in.

"Houses in Sydney and Melbourne are expensive. In Melbourne, homes cost around $600,000. In Sydney, they cost around $800,000. Look at suburbs outside of the city or smaller properties such as townhouses and apartments.

"There's so much to learn. Before you start looking, check your finances first. Talk with a broker or lender."

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Disclaimer: This article is for general information only. For specific financial advice, you should consider seeking independent legal, financial, taxation or other advice to check how the information here relates to your unique circumstances.

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