The end of a relationship is a tough time for everyone, but it doesn’t have to mean the end of your relationship with home ownership.
If you’re facing the prospect of having to leave your home due to a relationship breakdown, here’s a few things to keep in mind which could help you make a fresh start.
Increase your knowledge
If you ‘re in a situation where your former partner was the home buyer, or it was so long ago you can’t remember how the home buying process works, working out how to start again can seem daunting. The good news is that there is a wealth of useful information online, available free of charge.
For a start, you can visit government sites such as moneysmart
for general money management advice, or the Consumer and Business Services
for its section on real estate.
You can also:
Don’t be shy about contacting a broker or lender directly to ask for information. It’s their job to help you explore your options and understand what will work for your specific situation. No question is too trivial, and the more you know, the better the decision you’ll be able to make.
Increase your savings
If you received a lump sum payment as part of a settlement, it can be tempting to buy big ticket items or use it to supplement your income. However, the reality is it’s rare for most people to acquire lump sums very often, and if you can save as much of it as possible, you’re giving yourself a head start when it comes time to enter the housing market again.
There are options when it comes to saving, so do your research and find out what will work for you. If you want to ‘lock’ your cash away for a set term, you might like to consider a term deposit. If you plan to make regular contributions to your savings, a high interest savings account might be a good choice. Talk to your bank to find out more.
Increase your borrowing power
Many people coming out of a relationship find themselves with a significantly reduced income as they go from a ‘couples’ wage to just what they earn. Not surprisingly, this reduction in income can be a serious hurdle when applying for a home loan, as it will also decrease the amount you can borrow.
Apart from finding another job that pays better (not always easy at the best of times!), there are some things you can do to help brighten your borrowing prospects.
Cut up the credit cards
Your borrowing amount is reduced according to the limits on your credit cards – and that’s the maximum amount you can
borrow, not what you actually owe. If you can’t get rid of all the cards, try reducing their limits to the minimum amount.
Share the load
Consider a shared equity loan like HomeStart’s Breakthrough Loan*, which could allow you to borrow up to 30% more. In return, you’ll be required to share a portion of the home’s change in value when it’s sold.
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*The Breakthrough Loan is no longer available.