can you secure a home loan on a single income

Are you thinking of purchasing your own dream home?

If you are single and looking to buy property in most of Australia’s capital cities, you will most likely be locked out. 

The challenge comes from Australia’s high median property prices, with this becoming even more of an obstacle for those on a single income trying to become a first-time homeowner.

Single people earning average incomes have had a hard time attaining homeownership status in many capital cities in Australia, with financial assistance often required to achieve the goal of property ownership, with financial stress a common result. 

Research shows that ‘mortgage stress’ is a real concept used to determine whether a person can buy a home and meet the mortgage payments. 

Mortgage stress can be defined financially as the ability to spend more than 30% of your gross income on home mortgage loan repayments. 

The average income for different people varies from state to state and it’s only a few where people can actually avoid mortgage stress. 

Depending on the state, unless you have a very high income or have inherited a huge amount of money, you are less likely to be a homeowner. 

However, you can use the following tips to buy property if you are single. 


Tip #1 – Apply for a home loan with other parties 

If it’s hard for you to buy property alone, you should consider joining forces with relatives, siblings or close friends. 

Over the past few years, there has been a notable increase of mortgage applications with more than one person. As a result, there has been a decrease in the number of single mortgage applicants. 

With these co-investors, it’s easy enough to avoid the hurdles associated with home ownership. 


Tip #2 – Ask For Additional Guarantors

A lot of young adults have turned to their parents to finance their first homes. 

According to the property investment experts from Empowered Finance, there is a huge increase in the number of parents who have guaranteed their children’s home loans. They explain, “mortgage lenders such as banks and credit unions understand that parents might be frightful of the risks associated with signing up as guarantors on these loans. However, these financial institutions have created mortgage products that reduce the risks for the guarantors by splitting the overall loan amount over two loans.”

Therefore, if you feel that getting a home on your own is a challenge, your parents can always step up and guarantee the loans. There’s another option where parents can help their children in a much more straightforward way by giving them a lot of cash for the deposit of their new home. 

can you secure a home loan on a single income

Tip #3 – Boost Your Home Loan Chances With Secondary Income

Buying your first home is a huge financial investment that shouldn’t be taken lightly. 

There are a lot of costs involved such as stamp duty, deposit, mortgage repayments and many more expenses. If you are single, there is no one else to help you share the expenses. Therefore, if your current job doesn’t help you meet the expenses effortlessly, banks and lenders may refuse to approve your loan.

Finding a second income is more than just supplementing your current income streams to buy a home. By being creative, working from home, and thinking outside the box, a second income can make a huge difference when working towards property and help tip home loan applications over the line.

With an exclusive tip, wedding celebrant Darran Moran has seen people use secondary incomes to fund their dream weddings and says the skills are transferable to creating the capital needed to secure a home loan. He explains that, “there are many things you can do to create a second income. This will differ from person to person. However, what is most important is to avoid stretching yourself too thin. You shouldn’t be getting sleepless nights or anxiety attacks because you’re overworking.” 

It should be something that fits in your current schedule but gives you enough money to meet all the expenses and expectations of a home loan.


Tip #4 – Try Rent-Vesting 

There are many real estate professionals who can help you own the home of your dreams. But if securing a home loan isn’t in your immediate budget, why not try renting?

Or more accurately, rent-vesting.

Here, you can rent the home you are planning to buy and use the leftover money to make other investments rather than buying the home right away. For instance, if you are looking for a 3 bedroom house in a good suburb but the selling price is too high, you can try out this deal.

Here, you will rent the 3 bedroom apartment and opt to buy property in another suburb that’s more affordable. The property that you have purchased can be rented out to meet your rental payments for the rented property. If you choose to do so, try selling the other property to get capital gains. It’s a good idea to live in your dream home and create a good property portfolio for the future. 

This simple trick is used by more and more Australians with the floor sanding team from Glen Gilbertson Floor Sanding explaining “we’ve seen an increase in renovations and restorations to newly purchased homes to be able to secure higher weekly rental prices, which in turn facilitates home ownership. While this approach may take longer, it is an effective and well-used approach to home ownership.” 

In conclusion, just because you are single, doesn’t mean that you can’t afford to live in your dream home. 

With these tips, you can enjoy the process of investing in property with minimum stress today and wake up in your dream home tomorrow.