Cindy, a single mother to a 12-year-old son and 21-year-old daughter, has rented seven different places over the past 18 years.
“After going through a painful separation when my daughter was three, I found myself staying at a caravan park with little possessions until we could find somewhere to rent. I was 28 and unemployed as I had been a stay at home mum,” she says.
Six years after her separation, she had her son with a new partner.
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“I went back to complete my Bachelor of Accounting, doing my final exams whilst heavily pregnant and working full time in an accounts payable position. I then split from my partner when my son was four and found a house to rent on my own. Over the next eight years, I worked hard, completed my Chartered Practice Accountant qualifications and am now a financial accountant. This job has helped me save for a deposit.
“Two years ago I also started my side business Enchanted Gypsy, selling tarot card decks, which helped put me in a great position. However, I knew I was at least 10 years away from being able to save a 10-20 per cent deposit. There were always extra unexpected costs, like school fees and orthodontist fees.”
The added challenges single parents have to home ownership.
Despite Cindy working full time in a professional role, these costs, on one income, while renting with children made it more difficult for her to enter the property market.
Paul Williams, mortgage broker at Mortgage Choice has helped many single parents buy a home. He has found it disheartening to see many lose confidence in their hopes of securing a home.
“There are a lot of people who are just resigned to ‘I’m going to rent for the rest of my life.’ I find a lot of single parents have to rent somewhere that’s got more space for their children. This can often mean their rent can be higher than what their mortgage payment would be. But they can’t get into the market because they don’t have enough of what’s called ‘genuine savings’,” Williams explains.
Helene, 46, a single mother to 11-year-old twins and her son, 20, has been looking to buy for at least 15 years.
“I haven’t been able to save a deposit, even working full time as a teacher because I’ve been renting. Honestly, I didn’t think it was going to happen because rent is so high. In fact, I’m paying more in rent that I would be paying in mortgage repayments. It’s been so disheartening, working my butt off and for nothing it feels like sometimes,” she says.
Williams says “what a lot of people don’t realise is that some banks count the rent you’re paying as part of your genuine savings.”
Knowledge and education can lead you closer to purchasing.
This is why Williams strongly recommends single parents get educated about their options and talk to someone about how these can work with their personal situation.
“I just feel if people are more educated on the range of options, they’ll probably have more confidence.”
When Cindy and Helene heard about the Family Home Guarantee (FHG) announced in July 2021 this year, they went about educating themselves as to how it could work for them. This has resulted in them both having settled their loans through the scheme and they are about to move into their homes in the next two weeks. The government scheme enables eligible single parents to purchase a home with a 2 per cent deposit.
“I’ve always dreamt of owning my own home after getting divorced 18 years ago. I thought, this could be the opportunity,” Cindy shares.
Helene contacted a broker immediately when she heard about this scheme: “I would recommend a broker if like me, you have no idea what you’re doing, or need that support. Particularly if you don’t have a partner or anyone to talk to. It doesn’t cost you anything.”
Research different schemes available.
Williams explains it is also possible for single parents to purchase a home without using the Family Home Guarantee scheme. Recently he was able to assist a single mother, working part time to do this.
“We can look at 20 different lenders, and the borrowing capacity can range anywhere from $100,000 difference. When this mother went to her bank, they said no, but they didn’t explain why. She was so upset but at least I gave her the confidence to keep trying and we looked at different lender options. Other banks said yes, and the loan settled. This mother is now living in that home, we’re already seeing good growth in the value in her home. She feels good about herself,” he says.
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Williams says to be mindful of schemes such as the Homebuyer Fund where the government contributes up to 25 percent towards the purchase price.
“In the long term, you’re giving away part ownership of your property to the government while they also share in any future upside in value of the home,” he explains.
Megan Keleher, Chief Customer Officer at The Great Southern Bank says every single parent family is different.
“Some may have a higher deposit and can use other government schemes to step on to the property ladder with less than the traditional 20% deposit. It is so important to do your research with a home loan specialist early,” Keleher says.
Cindy also accessed the First Home Super Saver Scheme and highly recommends looking into it. Savings can be contributed into your Superannuation which can only be withdrawn for a first home purchase. “So it’s like compulsory savings. You get tax breaks on the money you put in there and don’t even notice if it’s being taken out of your pay.”
What owning a house means for single mothers.
Cindy says, “I found it really empowering that I have done this myself. My whole family and kids are really proud of me. It was something I didn’t think could ever happen. My son is so excited he can put posters on and paint the walls, that we won’t have inspections every three months. Just knowing that we don’t have to move again.”
Tips for other single parents.
Cindy says, “start a side hustle, if you can find something you enjoy and can monetise it. Research government schemes with your broker. If it wasn’t for the FHG scheme, it probably would have been another 10 years before I was able to afford it. Get finance pre-approval to move quickly. With that out of the way, it’s just about finding a property and getting in quick because each time I’ve found somewhere it’s already under offer.”
Helene says, “Go for it and speak to a broker. At least you can find out your borrowing capacity and you know what changes you need to make, whether it’s your employment or something else.”
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