Although many of us think of the property dream as involving a happy couple and a shared mortgage, the reality is that many Australians go out on their own to apply for a home loan.
The good news is that applying for a mortgage when you’re single can be done. And understanding some of the practical tips that can help you make it possible? That’s a good start…
How to Find A Lender That Suits You
Transitioning from renting a house to buying a house can be tricky – especially when your single income needs to cover your living expenses, rent, and the savings required to have the hefty deposit needed to apply for a home loan.
Buying a first home is challenging for anyone but when you are single it can be even tougher. The reality is that banks cannot legally discriminate against you based on your marital status but tighter lending standards can mean it is harder to meet the criteria with certain lenders.
Talking to a mortgage broker means that you can explore different loan products from a range of lenders. While some banks may make it hard for single applicants to meet the necessary criteria, an experienced mortgage broker will have a variety of lenders with different options available to suit different financial and lifestyle circumstances.
How To Save For Your First Home
Budgeting is always a good start. Not only does it show you where you might be able to trim some of your daily expenses (and you’ll be surprised how much those few take-away coffees each day add to your monthly bills) – it also gives you a realistic understanding of what you really can afford.
Saving to buy a home is one thing but managing to meet the ongoing monthly repayments is another, so it is important to be clear about what you can afford and what might be beyond your reach for now.
Buying your first home doesn’t have to mean over-extending to get into your dream suburb. Look at properties in suburbs that are a bit further out to find one that meets your budget. Getting a foot in the property door is a positive thing and with some careful planning, you can turn that first home purchase into the beginning of an investment property portfolio.
Reducing debt is always a positive thing so part of your savings plan should involve reducing debt with overblown interest rates as fast as you can.
Having a strategy to pay bills on time is a good way to clean up your credit rating – and that can improve your borrowing capacity.
If you are renting alone, consider a stint with a room-mate to cut your rental and household expenses by half while you save for your deposit.
Moving back into the family home of your parents can also be a good temporary move that allows you to beef up your savings and reduce unwanted debts in preparation for taking on a mortgage. It won’t suit everyone so be realistic about whether it is a good move for you.
Don’t Go House-Hunting Alone
You might be buying the property by yourself but that doesn’t mean you should go looking for the property alone. Choosing a trusted friend or family member to keep you company while you check out open inspections and attend auctions can help you stay focused and avoid the emotions that might cloud your judgement. If you have the budget, investing in the services of a professional buyer’s advocate may be a smart choice – especially if you’re time-poor and could do with some extra negotiating skills to help secure the best possible property deal.
Aim for 25 %
Although many home loan calculators will tell you that spending 30% of your take-home income on your mortgage is acceptable, you’ll have more room to breathe comfortably if you focus on 25%. Remember that owning a home attracts more expenses than renting – with rates, maintenance and insurance costs all having an impact on your finances.
Get The Right Advice
Buying a home is an important milestone and whether it’s a house for you to live in and enjoy, or an investment goal to tick off your bucket list, it’s important to buy wisely and get the right mortgage for you. Discussing your finances with professionals you trust – your accountant, a professional mortgage broker, and even a financial planner, if you have one – will help you get off to the best possible start in the property market.
If you need advice for a home loan, business or commercial loan, self-managed super fund loan, or a vehicle or equipment finance loan, speak to a broker at Lending Specialists. We have a wealth of experience under our belt and a robust network to connect you to the right industry professional for the loan you need.