Keeping single parents in the family home

Finding the right home loan for single parent families can seem challenging, but one lender is on a mission to change that and ensure home ownership is possible for anyone facing a marriage or relationship breakdown.

In fact, 15% of HomeStart’s new lending during the last five years has been to single parents, most of whom are in their 30s or 40s.

Often, the lender has found it is a single mum’s finances which have been most impacted by divorce. Since 2002, more than 80% of the single parents HomeStart has financed have been female. In 2019, females account for 85%.

HomeStart CEO John Oliver said the lender provides brokers the opportunity to say ‘yes’ to customers they may otherwise have said ‘no’ to.

What are the challenges for single parents?
For parents who are facing a marriage or relationship breakdown, the choices are often selling the family home or trying to refinance. Moving to rented accommodation can also be tough because many landlords are more inclined to accept tenants without children.

On top of the emotional strain they are already going through, they now have to worry about the financial strain too.

They may also be facing childcare fees, school expenses and household costs, potentially with less money coming in. Many lenders are also making it difficult with strict lending criteria.

 “Many of the home loan options we offer could help single parents remain in their family home after divorce or break-up, reduce the amount of money they need for upfront fees and deposit, and also make repayments more predictable so there is room in the budget for all of the family’s needs.

“Often, it’s just the helping hand they need to get over the first financial hurdle and set them and their family on the right path,” said CEO of Homestart John Oliver.

What can brokers do?
While many parents are single through relationship breakdowns, some are single parents by choice, or through other circumstances. It is up to the broker to really understand their borrowers’ situation and needs.

Oliver said, “Brokers play an important role in the buying process. A good broker will check in with their customers regularly to determine if their needs have changed. They understand a breadth of loan products and are there to translate industry jargon, explain and educate customers, as well as negotiate with lenders on the customers’ behalf.”

HomeStart also recognises that it is a “stepping stone” to home ownership and brokers should maintain that relationship with their client for any future needs.

“We understand our customers’ circumstances might change over time and don’t mind if our customers talk to their broker about refinancing with a mainstream lender once they have built-up enough equity,” Oliver added.

 Examples of how HomeStart supports single parents includes:

Offering low deposit loans, from as little as 3% deposit for eligible customers, reducing the savings needed to buy a property

  • Providing an opportunity to save thousands on upfront costs by avoiding Lender’s Mortgage Insurance (LMI). HomeStart’s Loan Provision Charge (LPC) is a lot less for most borrowers
  • Recognising a broader range of income types, including Centrelink payments and Family Tax Benefits, as well as recognising shift allowance, penalty rates and overtime for casual staff
  • Offering a range of subsidised loans that provide a boost in borrowing power without increasing monthly repayments. Unlocking a greater number of purchase options could be the difference between locations closer to schools, buying a home with an extra bedroom or a bigger yard than originally possible
  • Taking the stress out of loan repayments with a unique Repayment Safeguard. Instead of linking repayments to interest rates, HomeStart work out an initial repayment rate based on what you can afford with an annual adjustment for inflation