Hold onto the dream! Owning a place of your own may still be possible even if you are a low income earner.
It can be tempting to think that everything would be so much easier if only we earned a higher income. But achieving personal goals can come down to making the most of what we have. And that can be the case if you’re a first home buyer on a low income.
Sure, it may be harder to get a home loan when you’re a low income earner. But that’s not to say it can’t be done. Let’s take a look at how you could achieve the goal of home ownership.
Income can cover a variety of things
Your income will help to shape how much you could borrow for your first home. But a variety of receipts can fall under the umbrella of “income”. Along with any wage or salary income, regular government payments such as Centrelink allowances plus other receipts like child support may be taken into account as income by a lender.
Your expenses matter too
Your regular living costs is another factor that lenders may use to assess your eligibility for a low income home loan. This is important because you may be able to have some control over these aspects of your life even if you find it hard to increase your income.
Taking steps to reduce other debt for instance, can make you a more attractive proposition for lenders. Cutting back your spending where possible can show lenders you have additional cash to contribute to home loan repayments. And in the meantime, any savings you pocket from reduced spending could help you grow a bigger deposit.
Having a guarantor can help
As a low income earner, getting home loan approval could hinge on providing a guarantor. This usually means having a family member, who offers to guarantee your home loan repayments if you can’t keep up with them.
Because you are a low income earner, a lender may want to know about the guarantor’s financial situation, to be sure they have the capability to make good with your loan if the need arises. This could be something to explain to anyone you’re thinking of asking to act as guarantor for your loan.
Aim to save as much as you can
It’s not always easy to grow savings when you’re on a low income. However, it may be possible to boost your chances of loan approval by saving as much as you can towards your first home.
Having a larger deposit can provide a number of other benefits too. By borrowing less you could save on your home’s overall interest costs. If you can save a deposit of 20% you may also be able to avoid the cost of lenders mortgage insurance – and this can be a substantial saving.
Buying a first home can be achievable
With a plan of action in place and some professional home loan help, it may be more achievable than you realise to buy you first home as a low income earner.
If you’d like to talk to a broker – contact us today!
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- Chapter One : Getting started
- Chapter Two : Your Dream Home
- Chapter Three : Money Matters
- Chapter Four : Ways to Purchase
- Chapter Five : Understanding Interest Rates
- Chapter Six : Understanding Home Loans
- Chapter Seven : Lending Sources
- Chapter Eight : Getting Your loan
- Chapter Nine : Choosing a Home
- Chapter Ten : Steps to Settlement