Tue. May 14th, 2024
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Buying a property as a single parent might seem challenging—but if you know the steps to follow, you’ll be in for a much smoother ride.

Here are our top tips for securing a home loan as a single parent in the current economic climate.

1) Pinpoint which suburbs you can afford 

House prices can vary significantly between suburbs. Even two adjacent neighbourhoods can vary up to tens of thousands of dollars in median prices—so it’s essential to do your research.

Searching online is the best way to get a clear idea of average house prices in certain suburbs. You can also research the pros and cons of the area, including proximity to schools, shopping centres, and essential facilities.

As a single parent, you might look for a suburb with easy access to:

  • Public transport
  • School zones
  • Health facilities
  • Shopping centres
  • Parks and recreational spaces
  • Cafes and restaurants

Safety is vital, too—check reviews from residents to find out more about what life is like in a given suburb before you move towards buying a property.

2) Maximise your deposit 

Banks often consider single loan applicants higher risk, so maximising your deposit will give you a higher chance of success. We recommend saving up a deposit of at least 20% of the loan amount to avoid paying lender’s mortgage insurance (LMI).

If you’re having trouble saving up a deposit, here are some tips:

  • Set a goal amount to give you a figure to work towards,
  • Track your spending (there are plenty of apps for this!),
  • Create a realistic budget,
  • Open a high-interest savings account,
  • Set up automatic deposits into your savings account,
  • If possible, avoid using a credit card.

These steps may help you speed up your saving and purchase your own home sooner.

3) Research home-buyer schemes and government support 

Good news—the Australian government offers support and schemes for people in your exact position!

The Family Home Guarantee (FHG) is an initiative designed to support eligible single parents with at least one dependent child living at home. Whether you’re a previous homeowner or a first-home buyer, the scheme still applies.

Under the scheme, the National Housing Finance and Investment Corporation (NHFIC) may guarantee part of your loan (from Participating Lenders) up to 18%. This means you may only need to save a 2% deposit to avoid paying LMI.

4) Chat with a broker

The best way to learn more about your home loan options, including which lender to choose and how much you can borrow, is to chat with a mortgage broker. Many brokers will have experience in securing home loans for single parents and can guide you on the path towards approval.

Before you approach a broker, it’s a good idea to work out what type of home loan you need and whether you’d like any extras. For example, you might want a home loan with an attached offset account to save on interest and pay the loan off sooner.

Owning a home isn’t out of reach

All families deserve a safe, comfortable home. By following these simple tips, you’ll be well on your way to securing a loan and owning your own property. Speak to any expert, reach out to one of the best mortgage brokers in Sydney.