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Is it possible to get a home loan on a single income?

April 6, 2019

Getting on the property market can seem like a luxury only afforded by double-income individuals. While two heads are better than one, that shouldn’t stop you. Getting home loans on a single income is possible. Here are some pointers:

Check your credit

Your credit profile will have to be in great shape since it’s the only one being looked at. Always review your credit report beforehand, to ensure that it contains no mistakes. Remember that a mistake can make you look like a bigger risk than you genuinely are. Therefore, contact a credit reporting company to investigate and rectify any issues right away.

Avoid cancelling your credit cards because it might impact your credit utilisation ratio and reduce the average age of your accounts. Making huge credit card purchases before applying for a home loan is also a move that could hurt your credit rating.

Save for your deposit

Paying a smaller amount in deposit can incur you additional costs, such as getting LMI. You can avoid these expenses by saving up for 20% of the deposit. Make short, medium, and long-term goals and reward yourself every time you stick to them. Re-evaluate your expenses, cut out the fluff, and you might be surprised at how much you can save.

Protect your income

Since you are relying on a single income, it may be a good idea to take out some protection. Especially if you have a riskier job or poor health, disability insurance cover can be a good idea. This may ensure that you get help in paying your monthly mortgage payments in case you fall sick or get involved in an accident. It can give you peace knowing that you will be covered whenever you are not able to work.

Get a guarantor

Your parents can guarantee you to help you clear the underwriting hurdle, especially when you do not have a long credit history. First-time home buyers can check the eligibility requirements for first home owners’ grants.

Talk to Empowered Finance today if you are considering purchasing a home on a single income.

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