HOW TO PREPARE WHEN BUYING A HOME AS A SINGLE PARENT
Get yourself on Excel.
Preparing a thorough budget is the only way to gauge the affordability of buying a home as a single parent, and to what degree there may be uncertainty/risk in taking on a mortgage with one or more kids by your side. A budget will tell you in black and white whether you can afford this move. In one scenario, you may just have to concede that you cannot afford to buy at this stage of your life and that you need to look towards smaller investment measures that you can afford or work towards increasing your income with a clear idea of your budget for the next few years. So, at worst, a budget can help direct you in the right direction to buy, even if it isn’t going to be now. If you can afford to buy, but what you can afford doesn’t tick all the boxes you think you require, then prioritize. For instance, you may need to prioritize space for your children over having a separate laundry. Include your family into accepting these relatively small sacrifices that are necessary. For instance, you may need to sacrifice on having a yard. This isn’t a huge sacrifice to make if you seek out properties within distance to parks. Lastly, with your budget in mind and your investment goals linked to this budget, do you want a house that you will renovate? A budget will tell you what sort of cash flow you are likely to have, and whether this cash flow will allow for renovations.
Understand what you can use as income. As a single parent, you are often entitled to government payments providing your income does not exceed a certain amount. Certain mortgage lenders will in fact accept these government payments as evidence of your income. Be sure to ask about this when researching mortgage lenders. Compare what they offer. Ask how they approach single parents in comparison to couples when it comes to their customer relationship management and loan policies. A good mortgage lender’s answer should reflect the company’s strong relationship with customers from a range of income and socio-cultural backgrounds. It is therefore sometimes better to seek out a loan while your children are younger, to monopolize on these government payments that may end when your children reach a certain age.
Look at your state’s relevant First Home Buyers Grant, if they have one or something similar. Remember that these policies do change. In Victoria you can currently receive up to $10,000 for a new home in metropolitan Melbourne. In regional Victoria new homes receive up to $20,000. Lastly, seek professional advice. The expense of developing a relationship with a mortgage broker, accountant and/or financial adviser is an investment vital to purchasing property without putting yourself in financial risk, especially when buying a home as a single parent. A professional, who knows the industry well, can channel you in the right direction. For example, they can help you find lenders receptive to single parents. They can also provide you with the knowledge to get the most out of your earnings and benefits.
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