How to get a mortgage and buy property when you're single
Single? Here's how to buy a home
Rising property prices aren't putting single people off buying a home. Currently 35% of home loan applications in 2019 were by single people, according to ME Bank - 2% more than two years ago.
But singles are facing bigger mortgages than ever before with the average loan now at $401,343, up 5% from two years ago.
Single women are just as likely to buy a home as single men, with women making up 50% of all single home loan applications - up 1% from the previous year, according to a survey of ME's 43,000 home loan applications.
However, women are applying for smaller loans, with the average loan amount for single women applicants at $381,507, compared to $421,364 for single male applicants.
With house prices rebounding in 2019, loan applications increased, with Tasmanian-based singles experiencing the greatest jump in home loan applications, up by 13% to $281,977, followed by NSW, up by 8% to $458,592.
Single people not only have to come up with a deposit on their own, but they need to pay all the expenses such as stamp duty, conveyancing, pest and building tests, the lenders fees and, if they need it, mortgage insurance.
Saving for these expenses is not impossible but it does require plenty of discipline. You are up against couples with two incomes, so you need some smart strategies.
"Being single is not a reason to give up on home ownership, even as prices rise. Interest rates are at record lows and it's looking to be a positive year for buyers," says Andrew Bartolo, general manager of home loans at ME.
"Even as part of a couple, property is out of reach for many Australians. However, it remains an Australian dream, and can be achieved by employing a range of different strategies."
How to buy a home on your own
A good deposit helps
A 20% deposit is looked on favourably by the banks. It also means you don't have to pay costly lenders mortgage insurance, which could be as much as $14,000 if you only have a 10% deposit for a $700,000 property.
Do your sums carefully
Investigate all the costs involved in buying a home such as building inspection, legal fees, stamp duty and insurance.
Look for low interest rates
A home loan is a long-term debt, often over 20 to 25 years, so even a small difference in interest adds up over time.
Don't over commit
Be realistic about the amount you borrow because interest rates could go up or your personal circumstances can change so give yourself some breathing room.
Make fortnightly repayments
You will pay off your mortgage faster by making an extra month's repayment each year.
Consider rentvesting where an investor owns a property but they continue to rent where they want to live.
"The combination of rental income and possible tax breaks provides valuable extra cash, while allowing you to maintain your lifestyle by living in an area where you couldn't afford to buy," says Bartolo.
Become a co-owner
Consider co-buying with a like-minded friend or family member to share the costs.
Have your home loan pre-approved
You will know exactly what you can afford to buy and don't waste time looking at homes that are beyond your budget, says Bartolo.
Tips for single buyers
- Establish a savings plan and cut your spending.
- Move back in with your family to cut your living expenses.
- Pay off your debts.
- Lower your credit card limits.
- Consolidate any personal debts.
- Check out your credit score.
- Investigate the property market in your preferred location to work out how much you need to borrow.
- Pick a lender that suits your personal circumstances.
- Be sure to include all your income.
Get stories like this in our newsletters.