Applying for a home loan as a single mum, is it possible to get a reasonable amount?
I earn low to middle income ( I do well really and never go without)., only 1 child who is school age, I have a permanent job, I don’t receive any child support but get family tax benefit. I have a car loan ( half paid, did look at getting something cheaper but won’t make too much difference), I have two credit cards which are being paid off, have zip and Afterpay which both nearly paid too.
My credit rating is okay ( I looked but it’s improving as I pay off Debts).
I have saved a fair amount of deposit and hope to use the FHOG too.
So anybody can help with a broker name in Cairns region and any advice- it’s my dream to own a home.
Thanks
7 Replies
I have recently applied for my second loan and they took any afterpay and zip pay into account. Right now you have a lot of debts in the banks eyes, a car loan, credit card and the online shopping - I would try and knock one off at a time :)
Honestly, I doubt it. We are a single income family with one child. No debts or credit cards and we have never used Afterpay etc. Our credit ratings are over 800 and we have over $40k saved and yet no one will lend to us because apparently our income isn’t high enough. We don’t qualify for any grants and were told we would need at least $80k in savings. We live on the Sunshine Coast where the average house is over $500k.
The difference in cairns is she could get herself a little townhouse in a beachside suburb for 180 to 220k. Makes things a lot simpler.
Google "mortgage calculator" you enter your income + current debts + saving etc and it will give you an idea of what the banks would consider lending you. It will also give you an idea if that amount will buy you what you need in your area.
Whilst you might think you can afford so much per week in repayments, the bank will calculate less as they expect you to be able to cover the cost of unexpected repairs etc.
Its deffinently do able but I'd be clearing all debts no mater the size, stop using all afterpay zip etc, keep saving! Take on any extra shifts you can and save that money, tax return... save it.
Keep in mind, in regards to the deposit, you need at least 10-20% min, the higher the better, you go in with a lower deposit you will have to pay MIL - mortgage lenders insurance for the life of the loan. Aswell as this deposit you need to be able to cover the initial purchasing fees this can be approx an EXTRA 7% of the value of the house your buying which is expected to be paid upfront.
Pay the debt off first. Credit cards, Afterpay and Zip pay. Also look at extra expenses that you may be able to cut down on, Netflix, iTunes, Foxtel etc. They look at all of this when you apply for a loan and will look at your bank statements to see what gets direct debited every month.
I’m am in a similar position, single mum to one, low to middle class wage, don’t get much cs, so I take that as a bonus, if I receive it. Though I have no debts (paid off my last debt in January 2020). I just regular bills. I have been to a broker who is working on my information (I also know her personally), and at a quick glance of what homes are available in my area, they are a minimum of $339k for something that doesn’t need to be renovated. I have a $30k deposit plus I qualify for fhog of $15k so that’s $45k total deposit. I was advised to cancel my credit card (
Which I owed nothing on, but banks still see it as a debt) and was advised to cancel my monthly donations. My broker has advised that things will still look really tight in the lenders eyes. Based on what I’ve been told I’d be paying off those debts.
Sorry not in your area, I hope someone can recommend someone for you. 😊
It's definitely possible, I got a loan in Cairns for high $300ks, as a single mum of 2. I had no debt or credit cards and a consistent savings history. I did it after reading the barefoot investor and really knuckling down to lower my LVR.
1st, if you haven't already, read the Barefoot Investor, you can buy it for $19, or borrow from library.
2nd, domino your debts, close credit cards and after/zip pays, even paid off they affect your borrowing capacity as they consider the liability of the full amount of all credit limits, and focus on having 3 months of 'clean' bank statements (no frivolous spending, takeaway, bottleshops etc)
3rd, definately see a mortgage broker, they will be able to advise you of your options and how to increase your borrowing power. I've been seeing Smarter Mortgage Solutions in Westcourt for years and found them honest and helpful.
Good luck, you've got this!