Single parents, can you really get ahead financially with property?

[Chloe]

Hi Guys,

As the title says, do you think that a single parent can realistically get ahead financially with property on one average income (even slightly below average)?

I'm in a position now that I'll soon be looking for property to live in with my two boys. We sold our marital home so I have a reasonable deposit (not massive but good).
I've read so many times in the Property Investing magazine about single parents that have done so well etc.

Do you still think this is realistic or are these days long gone?
If you're a single parent/or not I'd love to hear your stories.

 

[Mr. Fabulous]

Couples on a single income do it, so a single parent can do it, since you have one less persons needs to worry about.

 

[Chloe]

Mr. Fabulous I agree but the bank tells me that because I have two young dependents and it's just me working it seems to impact my borrowing capacity etc. when they look at my situation.

 

[westminster]

Hi Guys,

As the title says, do you think that a single parent can realistically get ahead financially with property on one average income (even slightly below average)?

I'm in a position now that I'll soon be looking for property to live in with my two boys. We sold our marital home so I have a reasonable deposit (not massive but good).
I've read so many times in the Property Investing magazine about single parents that have done so well etc.

Do you still think this is realistic or are these days long gone?
If you're a single parent/or not I'd love to hear your stories.

I bought my first property by myself but I chose not to live in it. This could be an option for you. Realistically it is cheaper to rent for yourself and the boys and use your deposit to buy an investment property and have someone else pay off the mortgage on it.
If you crave stability of owning your own (which you may do after a breakup) then see if your deposit will allow you to buy your own place and perhaps a small flat which will start you off on the investment path.
It really depends on how much you have deposit you have and your income to service loans.

 

[Mr. Fabulous]

Mr. Fabulous I agree but the bank tells me that because I have two young dependents and it's just me working it seems to impact my borrowing capacity etc. when they look at my situation.

So do what you need to do is either:

a. Find a lender who will lend you monies on your current income.

or

b. Increase your income.

 

[TMNT]

im not tooting my own horn, but I think its safe to say that I am living proof that being a single parent hasnt stopped from getting ahead in property, in fact it helped greatly!

to the extent that had I not become a single parent, I can easily say that I wouldnt be in this position!

 

[Chloe]

Mr.F.....already one step ahead. I've increased my hours so I'm working 7 shifts per fortnight as well as a couple of casual nursing shifts on top.

I'll be researching lenders to see where I stand.

 

[Mr. Fabulous]

Chloe, I suggest you contact a mortgage broker. A good one will be able to give you options far beyond what you thought possible. There are plenty of good ones on here, take your pick!

 

[Fifth]

Mr. Fabulous I agree but the bank tells me that because I have two young dependents and it's just me working it seems to impact my borrowing capacity etc. when they look at my situation.

Wouldn't your borrowing capacity be even lower if you were a couple on a single income with two dependents? A mortgage broker might want to correct me on that?

Anyway, single parents aren't necessarily in a worse position than couples. It isn't about single versus couple, it's ultimately about income. Asking how single parents can get ahead financially is a bit like asking how long a piece of string is. You could be a single parent on 200k or a couple on a combined 60k etc..

 

[ali]

Hi Chloe, my friend, also a nurse, did it as a single mum ... with 2 toddlers then later another baby ... worked full time, saved and saved. Not sure if she ever slept, though! I have a huge amount of respect for her and her hard-earned financial security, that's for sure. Being a nurse would help with finance perhaps, because nursing is a secure job that is always in demand? Best of luck and good on you.
Cheers, Ali

 

[Aaron_C]

Chloe - which lender told you that you can't borrow money?

 

[Chloe]

Ali, I would think that nursing is a secure job as I've never seen an unemployed nurse!

Aaron, I've not been told that I can't borrow money but I had a loan declined by one bank. The whole process was a total shemozzle!

I have spoken to a broker (from aussie) and he seemed to give me the impression that I'm on the border to being able to meet repayments, he told me that some lenders won't consider casual employment, child support etc.

In the last couple of weeks I've applied to increase my permanent shifts to 7 per fortnight (approved) and I also work 1-2 shifts per fortnight in my casual nursing position.

The deposit I'll be using will be $110,000 which is good but not amazing. I'd love to purchase a place to live and an investment flat but I know I can't yet. I'm in Melb and I want to start with a subdivided home to live in and then assess my situation in 12 months.

 

[Aaron_C]

Aaron, I've not been told that I can't borrow money but I had a loan declined by one bank. The whole process was a total shemozzle!

Yeah sorry I should have clarified - which lender declined you? Some lenders have better serviceability than others and you broker should've known which one is best for you.

 

[Chloe]

Aaron, it was Bank of Melbourne.
That's where I had my money so I thought it would be a good place to get the loan. I didn't go through a broker for that one, just did it on my own.
I was told after the application was declined that they can't consider the things I mentioned above.
The lender at the branch that I dealt with stated that it was the first time he has been pulled up about including these payments.

I was beyond angry as I would never have applied if that was the case.

 

[Rolf Latham]

Aaron, it was Bank of Melbourne.
That's where I had my money so I thought it would be a good place to get the loan. I didn't go through a broker for that one, just did it on my own.
I was told after the application was declined that they can't consider the things I mentioned above.
The lender at the branch that I dealt with stated that it was the first time he has been pulled up about including these payments.

I was beyond angry as I would never have applied if that was the case.

STG BOM have a loooooooow serviceability model for most folks.

The banker should never have lodged the application...................there are specific and clear policies about what income is and isnt allowed,and unless the loan to value ratio was >80 %( where rules tend to get tossed out) he should push back on hic credit team and have the loan approved


ta

rolf

 

[schweedy]

I think they do include them, but can only include say 60-80% of the amounts, so while it looks good, by the time they have trimmed off the fat, it doesn't look as good.

Depending on what area you are looking at buying into, with that amount you could look at buying both a ppor and an ip.....as your ip would be generating income for you. Go established, even with existing tenants, dont get caught up waiting for a new build, save that for when you dont need immediate income as such.

I'd suggest talking to a broker or two, there are several on this site, and also looking at options for buying /investing to make the most of the future for you and your boys.

I started out buying a place for me and my 3 kids after my divorce, with what was left from my inheritances, when I met my partner, we both turned out existing places into ip's and bought a place together. We have since bought and sold a few, renovated a couple and still have two bringing in rent, and we are low income earners that are frugal....so it can be done.

 

[Chloe]

Rolf I agree, they obviously have a policy. They either do or don't accept other payments as income. It seemed like it was being made up as the credit guy went along.

It was reassessed and declined again because the date of my child support statement was current so it was assumed that I only started receiving these payments....I've been receiving child support since 2010.

I want to move on and hopefully there is a reason for this chaos and perhaps better things to come!

 

[Rolf Latham]

Rolf I agree, they obviously have a policy. They either do or don't accept other payments as income. It seemed like it was being made up as the credit guy went along.

It was reassessed and declined again because the date of my child support statement was current so it was assumed that I only started receiving these payments....I've been receiving child support since 2010.

I want to move on and hopefully there is a reason for this chaos and perhaps better things to come!

id suggest the first thing is to get a copy of your credit file from

www.mycreditfile.com.au

so you have an idea of whats been lodged there


The "make it up as we go along" happens quite a bit because some things on the edge allow the credit person the final say...........ce la vie

ta
rolf

 

[lizzie]

Chloe ... only two things to say ... it is definately possible ... and ... stop fiddling around and contact either Rolf or Aaron via pivate message (or their websites) and chat with them. Both are excellent brokers, with the ability to pull tricky deals together and who will give it to you straight.

 

[tobe]

Single parents are at a disadvantage, especially when they have shared custody of dependant children, and are in receipt of centrelink, FTB payments.

I havent come across a bank who can take into account a percentage of a childs living expenses, they are either dependant, or not. Family tax benifits can be used as income for some banks, but that of course is dependant on the percentage of shared care.

This is most likely why you werent able to get the loan.

There are ways to work around it, but increasing your income wont necesarily help (unless the income is jumping a fair bit), as lenders use an average of hours worked, some take account of night shift and other allowances/overtime, and some dont. Also, increasing your worked income, decreases your FTB income.

I suggest speaking to a broker about your specific circumstances. there are lenders out there who use FTB, maintanence income, overtime, and shift allowance, which will obviously give you a better borrowing capacity than a lender who doesnt.