Compare single income home loans

Almost any home loan could serve as a single income home loan if your income is sufficient to service the debt. If you have a lower income, you may only be able to borrow a smaller sum, which could limit the types of properties you can purchase. But if you’re on a higher income (for example, if you’re a doctor), you may be able to borrow more and have more property choices available to you. 

However, if you’re managing not just your home loan repayments, but also all of your other day-to-day living expenses on a single income, you may find yourself at a higher risk of ending up in mortgage stress. You may need to provide plenty of documentation regarding your income, debts and other assets to demonstrate you can comfortably afford the loan repayments.  

Saving up a home loan deposit on a single income can also be a challenge, especially if you’re already juggling other household expenses. Support from a guarantor may be able to help you apply for a home loan sooner. 

It’s important to research which home loan options may best suit your financial circumstances when you’re on a single income. 

Many borrowers start their home loan search by looking at the interest rates of different home loan deals – the lower the rate, the cheaper the repayments may be. Keep in mind that the lowest interest rates are typically offered to the “safest” borrowers, with higher incomes and larger deposits. 

As well as looking at the interest rates of different home loans, it’s also worth considering what fees different lenders may charge. Each home loan has a comparison rate that combines the cost of interest with its standard fees and charges, to give you a better idea of the offers that may prove more expensive overall. 

Some home loan special offers may appeal to borrowers on a single income. Some lenders don’t charge upfront fees on their home loans, or offer special discounted introductory rates that could help you save money at the start of your mortgage. Remember that these introductory “honeymoon” rates will eventually revert to a higher interest rate, so make sure you’re confident you’ll still be able to afford the loan in the future. 

The best home loan features for you will depend on your financial situation and personal preferences.  

Some borrowers on single incomes prefer a home loan with a fixed interest rate for simpler budgeting, as this will keep the repayments consistent for a limited time. Others prefer a variable interest rate, which may rise or fall during your loan term, but is more likely to have flexible payment options available. 

The ability to make extra home loan repayments can help you pay off your home faster and save money on interest charges. If you find yourself in a tough spot, you may be able to use a redraw facility to take these extra repayments back out of your loan when you need them. And an offset account lets you use your spare savings to help reduce the interest charged on your mortgage.  

Being on a single income means that lenders are more likely to consider you a riskier prospect than families with dual incomes – if something happens to your single income, you could quickly find yourself unable to afford your repayments, and end up defaulting on your loan. This means that when you apply for a home loan on a single income, your lender may undertake some fairly forensic investigation of your personal finances to help make sure you can comfortably afford the mortgage. 

Being on a single income could also mean that unexpected fees, charges and other costs could affect you more than they might affect dual-income households. It’s important to check the terms and conditions of any mortgage offer before making an application to help ensure that you’re aware of all the potential costs involved, and can budget accordingly. 

If you’re concerned about the potential risks of applying for a home loan on a single income, consider contacting a mortgage broker first. These home loan experts can help you find and compare mortgage offers that can suit your financial situation, and walk you through the application process to help you save time and effort.