The RBA has raised the official cash rate to 4.35%. Chat with us today to make sure you’re not overpaying your loan.
The Family Home Guarantee allows single parents the chance to attain a property with just a 2% deposit. Unlike other property deposits, which require between 5 and 10%, this enables single parents to borrow the other 98%, as long as they can prove the ability to pay their mortgage repayments.
While most couples can achieve a 5 to 10% deposit together, for single parents it isn’t as easy. Therefore, the government acts as the guarantor so that a single parent can buy a property more easily.
Any single parent who aligns with the following requirements is eligible for the scheme:
If you have previously owned a home, you can still be eligible. As long as the single parent does not have a freehold interest in property in Australia, a lease of land in Australia, or a company title interest in land in Australia, they are eligible.
Anyone that is still unsure if they are eligible should seek advice from a professional advisor.
Seeing as many government schemes have price caps, some regions might not be applicable for this scheme. If the price exceeds the cap, it is a good idea to look elsewhere for a property that fits within the pricing category.
The regional property price caps are as follows:
Knowing who are eligible single parents is an important step in the process to attain a home loan as a single parent in the housing market. However, there are certain property types that are and are not eligible for the home loan deposit scheme.
The Family Home Guarantee makes single parents eligible to purchase the following types of property:
Now knowing the price caps and eligible property types, it is useful to use the postcode search tool to check the prices in the desired area.
The biggest benefit of using the Family Home Guarantee scheme is avoiding the lender’s mortgage insurance (LMI) charge.
LMI protects lenders if they cannot repay the loan and their mortgage repayments. It can sometimes cost thousands or tens of thousands of dollars.
Under the Family Home Guarantee, a lender can deposit 2% and avoid the charge. This is due to the government effectively acting as a guarantor, who will back up the lender applying to purchase their own home.
Although there is a huge benefit for an eligible single parent when using the home loan deposit scheme, there are also some risks to know about. The most obvious risk is that with a 2% deposit, the single parent will have very small equity of the property. The main risk of such a small deposit is if the property lowers in value, then the lender could end up in debt as opposed to profit. The debt could outweigh their deposit amount and therefore, put the lender at a big financial loss.
Any single parent that pays their home loan repayments has a reduced worry as they will be building their equity the longer they pay.
Another risk is that a lender’s interest rate will be much higher with a 98% deposit. With a larger deposit, the lender pays less of their own money upfront. The smaller the deposit is, the more money the lender has to borrow, which will hike up the interest rate.
Lastly, there are some federal risks involved. Although the Family Home Guarantee aims to support those with a single parent home loan, they cannot be legally responsible and make payments on behalf of the single parent. Should a single parent lack the ability to make the repayments and incur debt, then they will need to sell the property in order to recover their debt.
There is a limit of 10,000 single-parent home buyers who can be accepted for the Family Home Guarantee scheme. Or, 2,500 per year.
To apply to the scheme, single parents must submit an application through the National Housing Finance and Investment Corporation (NHFIC).
Thereafter, accepted single parents will need to apply for a loan with banks that are also taking part in the scheme. The participating bank lists are below:
To increase the chance of a home buyer’s home loan being accepted as a single parent, here are some useful tips.
With the home loan approved, the applicant will then be able to go about purchasing their existing home or building their own home.
As a parent that is without a spouse and has dependent children, it is useful to seek government help if you are looking to buy a property. Attaining a home loan as a single parent has never been easier thanks to the Family Home Guarantee scheme.
As long as an individual aligns with the requirements, they will be an eligible participant, among thousands of other single parents, to get help attaining a home loan in Australia.
Any individual that has a 2% deposit and wants to buy their first home or their tenth home should make an application and once successful, attain a loan from a participating bank. This scheme runs until 30 June 2025 and with 2,500 being accepted each year, it is important to be quick in order to receive help for getting on the property ladder.
Complete the form below and we’ll send you our FREE Refinancing 2.0 Guide.
Calculate the stamp duty charged on your purchase. Note that stamp duty varies from state to state and depends on if the property is your primary residence, the value of the property and your residency status.
It’s Simple 2023 © Its Simple Pty Ltd. Trading as It’s Simple Finance (Credit Representative 522885) is authorised under Australian Credit Licence 390261. ABN: 22 637 831 157 | ACN: 637 831 157
Terms, conditions, fees and charges apply and your full financial situation would need to be reviewed prior to acceptance of any offer or product. Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.
This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
Subject to lenders terms and conditions, fees and charges and eligibility criteria apply. Check out our Privacy Policy.
