Security for single parent households
Wednesday, 15 July 2015
The Australian Bureau of Statistics recently reported that single parent families make up one in six Australian households, meaning most of us would have personally experienced the unique challenges single parents face.
One of these challenges is being able to meet the significant financial demands of providing for their families, such as childcare fees, school expenses and household costs, on a limited income. It is no surprise then that many single parents view home ownership as nothing more than a dream, because of the long-term financial commitment that goes with it.
Why is it important?
There are many reasons why home ownership can be vitally important for single parent households. It can provide security, stability and a sense of community, resulting in many positive social outcomes, particularly for children who are able to build stronger social networks and develop a greater sense of identity.
Home ownership enables single parents to move out of the rental cycle, which can be particularly demanding because of the disruptions associated with moving home on a regular basis.
There are also the more practical elements that make renting particularly challenging for single parents, such as landlords being more inclined to accept tenants without children or requiring a rental history, something recently divorced parents in particular, may not be able to provide.
How single parents can get into home ownership
Until now, the largest barrier to home ownership for single parents is the strict lending criteria required by many lenders. However, some lenders, including HomeStart, have recognised the need to provide more flexible finance options to enable disadvantaged groups, including single parents, to achieve home ownership.
One way of doing this is by recognising a broader range of incomes, such as Centrelink payments and Family Tax Benefits. For single parents, who in most cases are juggling the care and wellbeing of their children with their working life, this enables them to find an appropriate balance between work and their families without sacrificing home ownership.
Shared appreciation loans are another option that provide a way for single parents with limited incomes to boost the amount of money they can borrow, typically without increasing loan repayments. For newly divorced parents, this can be particularly useful because it may enable them to purchase their former spouse’s share of the family home, which can mean less disruption, particularly for the children at an already tumultuous stage of life.
Low deposit loans are another useful option as they reduce the amount of upfront savings required by homebuyers, which is a major benefit for single parents who may find it difficult to save money because the majority of their income is already committed to household costs.
Over time, single parents generally begin to find their feet and establish more financial independence. Often, giving them a helping hand over the first financial hurdle and setting them on the right pathway is all they need and the long-term benefits for our communities are enormous.