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Getting a home loan when you're on one income

Buying a new home on one income either as a single person or when you or your partner are not working can feel really difficult but there are ways to make things work and things to consider. 

Other forms of income

As well as your salary or business net profit, there are other forms of income that can be considered by banks when looking at what you could use to pay for a home loan.

Boarder/Flatmate income

Often when someone is planning to buy on their own, they have a plan to add flatmates or boarders to live with them if they have spare rooms and want some help with paying the home loan repayments. This is a great source of additional income and can really help with increasing your purchase price. There are a few things to consider with this option:

  • your deposit may dictate how many (if any) boarders/flatmates the bank will rely on as additional income. When you have less than a 20% deposit, some banks don't accept boarder/flatmate income and some will only accept 1. (Note: You can have flatmates/boarders regardless but the bank may take their income into account when accessing your ability to service (afford) the lending. 
  • You can usually have a maximum of 2 boarders (depending on bank policy) but if you only have 1 spare room, you can only have 1 flatmate/boarder (yes, a couple could share a room but would be considered 1 boarder).
  • The amount you can reply on will be anywhere from $150 - $225/week depending on the specific bank. Yes, you might be able to get more than that, but that is all the bank will take into account. 

Working for Families/Child Support/Benefits

All these forms of income can be accepted but each of the banks have differing policies of each. Some will scale that income to 80% of it's value, others will start to scale more as kids get closer to 18 years old and benefits will depend on the type of benefit and it's consistency and whether it is permanent or temporary. Being clear about what you are entitled for and what the terms of those entitlements are is really important when looking to use other forms of income. 

Buying with someone else

We understand that this isn't always possible for a number of reasons but it can be a really good way to get into the market for the short term, build some equity and then go and do your own things when it is possible. 

It is amazing to see the difference adding another persons income can make to servicing a home home. This person could be a family member, friend or work colleague. There are two main things to consider here:

  1. Making sure everyone is clear what the purpose of the purchase is and the potential timeframes etc - Chat with a solicitor and get good advice on how this could best be structured. 
  2. There is a strong relationship and openness between the two borrowers - Getting a property together is a large commitment and there will be financial things you need to discuss very openly with each other so you need to be upfront to do that. 

Getting family involved, especially in the deposit, is also an option. You can read more about that here.

Touch base with us

We love working through situations to find solutions for people so if you are on one income and want to discuss what you could look to borrow, or some other ways to make things work, please get in touchwith Adam, Claire, Greg or Amber and we'd be love to hear your story and see how we can help.