Single income home loans
It's not unreasonable to think you won't be able to get a home loan if your family only has one income to live on, however, that's not actually the case. It can be trickier in terms of getting approval for a mortgage and careful financial planning will be required to meet your monthly repayments, but it's by no means impossible. You're as entitled as any family to own your own home so when you begin your research it's worth getting advice from a mortgage broker.
What are single income home loans?
These are essentially no different to other home loans but they take into account the fact that there is only one income available to make the repayments, as well as funding all the other day-to-day costs of living. In practice this means you are likely to have to produce a number of documents relating to your finances, such as proof of income and identity as well as information about debts and assets. If you are using a guarantor, such as a family member or friend, you'll be asked to provide documentary evidence of this. Single income home loans are definitely available; you may just have to jump through more financial hoops than other borrowers.
How do single income home loans compare to other products?
With many different types of home loan available you should do in-depth research to look at what options best suit your financial circumstances. Some lenders anxious to attract customers may offer no fees for applying, which could save you a deal of money upfront. Others may have introductory offers with low interest rates for an initial period so these types of deals are worth exploring to try to keep your initial costs down. If you are on a single income you could still have some savings, and some of these could be put into an offset account, so that you pay less interest on the principal amount you were loaned.
What are the main features of single income home loans?
The two most common types of single income home loans are those that offer a fixed interest or variable rate. Fixed rate mortgages mean exactly that. You will pay the same every month for a fixed period without the repayments increasing. With a variable rate mortgage any interest base rate change could mean repayments going up or down depending how the central bank decides to increase or decrease interest rates and whether your lender passes a rise or fall on to you.
Are there risks to consider?
Being on a single income means that lenders are likely to consider you a riskier prospect than families with a dual income, which is why you will undergo some fairly forensic financial investigation by the lender. Finding deals that lower your upfront costs and give you repayments that are affordable on the single income can be found, so it's sensible to make plenty of comparisons between products before taking a final decision on the provider to sign up with.