Tips for buying a house if you aren’t a “mainstream” family

We all know that families come in all shapes and sizes – single parent families, blended families, families with kids and step-kids and foster kids. Some of us come from exceptional circumstances such as surviving violent relationships which can come with its set of financial complications such as impaired credit or starting from scratch. If you aren’t in the usual married (a man and a woman, that is) with 2.4 children and looking to buy a house, it can be troublesome, frustrating, and sometimes you just want to pack it all in. But here are some tips for buying a home even if your family doesn’t fit into a neat little box – and perhaps save money (and your sanity) in the process. 

Single parent families

After a divorce, not knowing where you will live and take care of your children is at the very top of your mind. Getting a home loan as a single parent can also be difficult to say the least. The Federal Government’s New Home Guarantee scheme allows single parents to purchase a home with as little as 2% deposit, with the remainder being guaranteed by the government to waive Lenders Mortgage Insurance. The places are limited, so ask a bank, lender, or broker to see if you are eligible and if you can secure a place with the scheme first.

Families with bad credit

If you have bad credit (a below average credit score) you can still get on to the property ladder – though your terms and interest rate will be much higher compared with mainstream interest rates. If you are approved, you may be able to refinance at lower interest rates or more flexible terms as your credit score increases. Another avenue to go down is to have a co-signer or guarantor (someone who is preferably asset rich and has good credit) to your loan, who acts as “backup” in case you aren’t able to meet repayments. Remember: this puts your guarantor at financial risk, so be careful about who you ask.

Blended or de facto families

Even if you are considered a de facto relationship by the government, a home loan provider will usually assess each individual on their own merit; financials, credit history, etc. You could apply for a home loan independently, but in the event of a breakup, this could leave your partner without anything to show for maintaining the property or putting money into it. You may have to set up a joint ownership structure or ask a solicitor to draw up a separation agreement. In either event, you will probably have to speak to a lawyer to get solid advice.

Reverse mortgage

Reverse mortgages are for retirees who already own or have significant equity in their property that gives them access to cash and doesn’t require repayment until the property is sold or the homeowner leaves the home permanently. This could help fund the purchase of another property (perhaps your parents helping out) – though it does take on certain risks and restrictions, such as being unable to rent out the home to tenants. 

There are ways for unconventional families to get on the property ladder – just remember to consult a financial adviser for the best and latest information!