Property settlement following a separation can be extremely complex. Working through it in an amicable way with your ex-partner is the best way forward, but understandably not always possible. When we work with a couple we aim to find the fairest settlement for both parties with maximum wealth to begin their new lives as single parents.
A settlement may mean losing the family home or moving out and into a rental property. For many, this is not ideal and although purchasing a property is top of the wish list, it might seem like an unattainable dream.
However, with planning and perseverance there is no reason why you shouldn’t be picking paint colours for your new forever home at some point in the future.
Here are our simple tips on how to work your way towards the property ladder as a single parent.
GET SAVING TODAY
It may seem obvious but one of the first things you can do if you want to be a homeowner, is to start saving … today!
It can be as simple as cutting back on an unnecessary pleasure such as that second latte of the day. Or you can go all out by setting up a savings account and allocating a percentage of your wages each week.
Whatever you can do right now is great, however small. You will be surprised how quickly savings add up if you persevere.
AVOID PAYING LENDERS’ MORTGAGE INSURANCE
Lenders’ Mortgage Insurance (LMI) is an insurance to protect the lender and is generally payable by you if you borrow more than 80% of your home’s value. It is usually a one-off payment, but certainly one you can do without. Check the details around Lenders’ Mortgage Insurance with your preferred lender and work towards saving the required deposit and avoiding this cost.
DEAL WITH YOUR DEBT
If you have a credit card debt or other personal loans, concentrate on paying them off as soon as possible. Not only do credit cards have high interest rates that will hamper your home-buying plans, but banks like to see you can live within your means before lending to you. You need to make yourself the perfect applicant so get your debts sorted as a priority.
UNDERSTAND WHAT COUNTS AS INCOME
When purchasing a property, you will need both a deposit and proof of income to show you can afford the mortgage repayments you are committing to. This includes your wages at your current job, how long you have had the job and how secure it is. However, some mortgage lenders will also take into consideration government payments such as Parenting Payments, Family Tax Benefit, Child Care payments and large family allowances. Knowing what counts as income will allow you to position yourself perfectly for the property ladder.
CONSIDER USING A BROKER
As a single parent, it would be fair to assume that you’ve got your hands full. Life is busy and the added pressure of doing research to find the right mortgage lender for you might seem all too much. Enter the Mortgage Broker. Not all Mortgage Brokers are equal but finding the right one to assist with your property purchase will save you money, time and stress. Hunt down a professional who understands your needs as a single parent as well has having a big lender panel i.e. lot of lender choices so they can find the right one for you. Find out more about what to look for in a Mortgage Broker here.
CHECK YOUR ELIGIBILITY FOR THE FIRST HOME OWNERS GRANT
If you have never owned a property before, here in Australia or overseas, you might be eligible for the First Home Owner Grant (FHOG). This is a one-off payment designed to offset the effect of the GST on home ownership. It is funded individually by states and territories and administered under their own legislation. This is definitely worth checking-out if you think you might satisfy the eligibility criteria and will save you a nice-sized chunk of money.
MAKE MORE MONEY
This might seem very simple, or indeed impossible, at this stage of your life but increasing your income is a sure-fire way to make you a homeowner sooner. Think outside the box. Can you take on extra hours at work, request a pay rise or go for a promotion? Is there something you can do to earn money along-side your normal job? Uber driving or contract work such as proof-reading, cleaning or anything that falls into your skill set? Earning more money at this time is key to getting on the property ladder and it may only be a temporary change.
WORK ON YOUR BUDGET
If you already have a budget, now is the time to go through it carefully to ensure your outgoings are as small as possible and your incomings are as large as possible! Look for ways to change your lifestyle (and budget figures) to allow for surplus income which you can save on a regular basis. Make sure there are no unnecessary payments going out that could instead be put towards a deposit fund. Now is also a good time to shop around for the cheapest possible utility deals and make changes needed to lower that outgoing figure.
If you don’t have a budget, you can download an excellent free template from the MoneySmart website. And follow our guide to successful budgeting here.
