Raising a child and a family in 2022 is definitely not without its challenges! Imagine sending your kids to school, paying enrollment fees and budgeting your household expenses with one source of income. As a single parent, can you still dream of owning your home?
Being a single parent is hard enough. You juggle between taking care of your children, managing your household and dealing with your job. Then, add in the increasing cost of goods, the rental crisis and the increased cost of rent (largely attributed to the RBA rate rises), saving for your dream home becomes more out of reach.
But what if you can secure your keys with a deposit of low as $8,000? Here’s how you can get one step closer to the front door of your dream home:
How much should you deposit for a home loan?
Most lenders require at least a 20% deposit so that you do not pose a risk to them. The lender’s mortgage insurance (LMI) protects lenders if you borrow more than 80% of the property’s purchase price and allows you to borrow up to 95% or higher.
To put it in context, you must deposit at least $80,000 if you purchase a property worth $400,000, and your lender requires a deposit of 20%. As a single parent, saving this much money seems like an impossible task… Or is it?
Don’t lose hope because there’s a scheme that will help you deposit lower and own your home faster! And if you work in the medical profession, you may also be eligible for low deposit home loan offers from our lenders and bankers.
What is the Family Home Guarantee?
The Family Home Guarantee is under the Federal Government’s Home Guarantee Scheme. This allows single parents to deposit as little as 2% without paying the (LMI).
If you are eligible for this scheme, you can deposit as low as $8,000 if you purchase a property valued at $400,000. That is $72,000 less from your worry!
From 1 July 2022 to 30 June 2023, there are 5,000 guarantees available each financial year. This guarantee is applicable whether you’re a first-time buyer or have owned a property in the past.
While this guarantee allows you to deposit as low as 2%, keep in mind that participating lenders may require more depending on your situation.
It’s Simple Success Stories
To give you more ideas about how this guarantee works, here are some of our clients who secured their property with a 2% deposit:
Joshua had been renting for years and thought it was impossible to own his property. He was unaware of the Family Home Guarantee until we came in. Joshua secured his dream property worth $565,000 with just a 2% deposit!
His weekly loan repayments are now only $60 more than his past rent. But now, he’s paying off his property instead of someone else’s!
Evette is a single mother who couldn’t find a lender for her dream property worth $435,000. There was a bit of a struggle, but we managed to contest the information.
We secured her loan with only a 2% deposit. Now, Evette and her child’s future is secured!
If you want to have what Joshua and Evette got, you can talk to our expert brokers for free. You get more choices and better rates from our access to over 40 banks and lenders, so we may also help you secure your dream home sooner with a 2% deposit!
Who are eligible for the Family Home Guarantee?
To qualify for this scheme, you should:
• Be single (No spouse and/or a de facto partner. Note that being separated but not divorced is not considered single.)
• Have at least one dependent child
• Be the natural or adoptive parent of the child
• Have a taxable income under $125,000 in the previous financial year (excluding child support payments)
• Not currently own a property
These are just some of the criteria you should meet. It’s best to talk to your lender, better yet, talk to us. We’ll do the hard work for you, so you can spend more time with your kids!
What types of properties are eligible?
This guarantee can be used for eligible residential properties, which include an existing house, townhouse or apartment, a house and land package, land and a separate contract to build a home and an off-the-plan apartment or townhouse.
Note that the property price caps apply and differ based on the location and the financial year.
Is it smart to purchase a home now?
Based on CoreLogic’s Quarterly Rental Review for Q2 2022, Australia’s rent demand rose to 2.9% over the June quarter, and dwelling vacancy rates fell by 1.2%.
In turn, capital city rents have increased by 3.0% over the June quarter. This puts pressure on existing and new renters as your landlords may pass on the interest payment increases to you.
With the recent interest rate hikes and decreased borrowing capacity of professional investors, it’s also interesting to note that the housing price growth extremely slowed down in May 2022 and continued to drop this June 2022.
Owning your property is still expensive. You should consider the increase in borrowing costs and mortgage repayments that come with the rate hike. Since everyone’s circumstances are different, it’s best to consult with lending specialists to help you make smarter decisions that best match your needs and goals.
How can you save more for your deposit?
Saving for your deposit is more challenging for single parents. Here are three tips to help you save faster and smarter:
• Stick to your budgeting system: As much as possible, monitor your income and expenses. Minimise or avoid impulse buying. Also, try to find bargains (i.e. sale prices, lower offers, etc.) for your purchases. This will help you save more money on your expenses and dedicate the extra to your home savings!
• Check your debts: Try to reduce your debts. For example, if you have several credit cards or loans, you may consider consolidating them into one loan, which might reduce the interest rates and help you manage your debts easier.
• Consider a high-interest savings account: High interest rates are not all bad. You can also take advantage of them! For example, term deposits usually lead to higher returns when the interest rate increases.
Other grants and schemes
In case you do not qualify for the Family Home Guarantee, you don’t have to worry. There are still more grants and schemes that may help you save more for your dream home:
1. First Home Buyer Guarantee
2. First Home Owner’s Grant
3. Stamp duty exemptions
4. First Home Super Saver scheme
5. First Home Buyer Choice will
Settling in your home can be more reachable! The key is to have expert brokers and make smart financial decisions.
Is it time to settle in your own home?
With the house prices softening in some areas of Australia and the Family Home Guarantee, it can be a great chance to purchase your dream property now.
Get in touch with our brokers for free, and we will gladly assist you with your eligibility and offer tailored advice that matches your situation and goals. You may also get more options, better rates and cashback offers!
If you are around Sydney, you may also be interested in our First Home Buyer Seminar on 27 July in Kogarah. Register today, and know the ins and outs of owning your first home from our panel of expert speakers.
Have a question?
Stay tuned for our upcoming blogs that will help you further understand and better manage your finance!