How can a single parent buy a home?

Single mum purchase property

As a single parent, buying a new home might seem as inconceivable as your children voluntarily tidying their bedrooms. Yet with the knowledge, know-how and a few handy tips buying your first home, on your own, might be more achievable than you think.

According to HomeStart Finance nearly 20% of their customers are single with dependents. That’s an encouraging figure and one that should incentivise you if you decide to navigate the housing market alone.

Many single parents bring up their families in rented accommodation – often with the belief that this is their only option. However renting can be hard on parents and children alike. Regular rent inspections and the fear of being given your marching orders at the end of a rental agreement can create insecurity, anxiousness and vulnerability.

If you feel that buying a home alone is an insurmountable dream that will just never happen, it may just be worth thinking again.

There are many advantages to owning a home, which include a sense of stability, security and pride, a closer tie to your community and greater privacy.  Plus there are lots of financial gains such as the home increasing in value, predictable costs (with fixed rate mortgages) and possible tax deductions. In fact a nationwide research study in Ohio states that: ‘Parents who own their own home may be helping to boost their children’s education achievements and even reduce behavioural problems’.

So with this in mind, what actions can you take to secure a place to call home?

Buying a house

How can I purchase a property as a single mum?

Understand what counts as your income

Your income amount is paramount when it comes to getting a mortgage as it dictates what you can borrow. But did you know that some lenders allow you to include government payments as income? These include Family Tax Benefit A & B, Parenting Payments, Child Care benefit and large family allowances.

Check your eligibility for a First Home Owners Grant

Depending on your past history on the property market, you may be eligible for the First Home Owners Grant. These government initiative grants vary depending on what state you live in but they are definitely worth checking out. Imagine receiving a $15,000 kick start towards your mortgage?

Find a great mortgage broker (that understand the needs of a single parent)

There really are some great, professional people out there that can guide you through the home-buying process. They have an intimate knowledge of the loan market and will help you find a lender that is right for you as a single parent. Oh and don’t be put off by their charges as most lenders receive a commission from the lender, meaning that it’s a free service for you.

Avoid paying Lenders Mortgage Insurance

If you don’t have a huge deposit for your dream house you might find yourself with the additional cost of Lenders Mortgage Insurance. This is charged if you need to borrow more than 80% of the property’s value and it can add significantly to the cost of your loan. To get a better idea of the costs that could be involved use this Lenders Mortgage Insurance Estimator Tool. Also speak to your broker about ways to boost your borrowing power and if you can avoid this additional, unwanted sum.

Calculating cost for mortgage

Be a savvy saver

When you’re saving for a deposit you must adopt the habits of a savvy saver. Make sure you utilise the best high interest savings account available, ideally with an incentive if you make regular payments but don’t withdraw. There’s some great advice around this in The Barefoot Investor by Scott Pape. And make it as painless as possible by setting-up an automatic periodical payment for as much as you can afford. Also make sure you cut-back on any everyday unnecessary expenses. For example, how much could you save if you change some of your food brands, or cut out your morning coffee a couple of days each week? This is a great time to teach your children the value of money too.

Learn how to budget

Do you have a financial budget? If not this could be the time to start one. Work out your money in/money out each week and then cut down on your outgoings. You can also use this process to calculate what mortgage loan repayments you can comfortably afford so you don’t overstretch yourself when the time comes to buy. Head to the fabulous MoneySmart website for a comprehensive guide to budgeting, or check out some great budgeting apps here.

Consider ways to increase your income

Rack your brain to see if you can increase your income in any way. Could you ask your boss for a pay rise? Put in some extra hours at work? Look for another job? Check with Centrelink that you are receiving all the payments you’re entitled to? An increased income will speed-up your deposit saving process and will boost the amount you can borrow.

Change your thought process and dream big

Stop thinking that owning a home is for other people, but not for you. Understand that you have as much right as anyone to own a secure, comfortable home in which to bring-up your beautiful family. Keep your dream home at the forefront of your mind. Find a picture of the kind of house you’d like and stick it to the fridge. Most importantly, consider the bigger picture. So when times are tough while you save for a deposit, remember what you are aiming for and ultimately the wonderful gift you will be giving yourself and your children.

Single mum with new home

Lucy Good

Lucy Good

Lucy, founder of Beanstalk, sits at the centre of the think-tank of modern-day single motherhood. Her mission is to help single mums navigate the maze of separation and divorce, and to confidently rebuild and embrace their new path in life.

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