How to buy a home on a single income in Australia

A Melbourne woman made a extreme decision in order to afford to buy a house on a single income but says it is possible.

Melbourne woman Nicole Haddow is single but she’s recently achieved the Aussie dream by snapping up a house all on her own.

But the 38-year-old admits it wasn’t without its “challenges” with a move to the regional Victorian town of Ballarat necessary to make it happen.

“I’m treating it as an adventure. I bought a house that needs work, there are holes in the walls and I’m in process of lifting tiles and painting,” she told news.com.au.

“But I’ve met lovely people, there are great coffee shops and a great community and I’ve got no doubt that it’s going to be a great lifestyle choice in time.”

The copywriter got a foot on the home ownership ladder by first becoming a rentvestor, when she purchased a two bedroom apartment in Melbourne’s CBD.

She had moved home with her parents for 12 months to do a “power save” and also used her writing skills on a number of side hustles to boost her income as well.

However, she admits she had less than 10 per cent of the deposit when buying the apartment and choose to take on lender’s mortgage insurance.

“I certainly hadn’t expected to be on my own so when I was saving for my first property. I was 30 and I realised that I couldn’t be waiting for someone to do it with me, so I needed to find a way to build my own security,” she explained.

“Honestly, there are times when it’s challenging and overwhelming but the same can apply when you are in a relationship. I’m really proud of what I’ve achieved and I really like knowing I’ve got an asset that I’ve secured on my own.”

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Nicole said she was proud to be able to achieve a level of security on her own. Picture: Supplied

When the pandemic hit, the tenant moved out of the apartment she had owned for more than six years and Ms Haddow decided to sell up and use the equity to buy a house.

She said single people can still buy on their own, despite property prices soaring around Australia.

“I had to move to regional Victoria to buy a freestanding home but I feel really fortunate I’m in that position,” she said.

“There is still generally more affordable housing if comparing it with capital cities and regional towns but it’s about whether you are willing and able to make that lifestyle shift.”

Single homeowners on the rise

Despite skyrocketing house prices individuals are still managing to get a foot on the property ladder, with 38 per cent of all loan applications received by ME Bank from singles, according to new analysis.

Even when the pandemic hit, loan applications jumped by 3 per cent for singles during 2020.

The average loan size for single-mortgage applications increased by 1 per cent too, reaching $405,755.

But the loan size for single female applicants is well below men at $386,222 compared to $424,820 for single male applicants, the ME data found.

Aussie singles are also striving for home ownership at a younger age, the data showed. In 2018 the average age for single first home loan applications for both women and men were 35, showing that many Australians are now entering the market earlier.

Yet, single males are likely to leap into the property market before females, buying in at an average age of 32 compared to 34.

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The average loan size for singles was just over $400,000. Picture: NCA NewsWire / Gaye Gerard

Ways for singles to make home ownership happen

ME’s head of Home Loans and Personal Banking, Claudio Mazzarella said despite escalating house prices, the dream of home ownership is still a priority for many Australians.

“While there can be challenges with solo applications, such as saving for a deposit and borrowing capacity, it’s certainly not impossible,” he said.

“For those wanting to get their foot on the ladder, but unsure about a single mortgage application, one strategy to consider is co-buying – purchasing a property with a family member or friend. Co-buying enables both parties to save for a deposit in a shorter timeframe and increases your overall borrowing capacity.”

He also recommended considering a guarantor where someone uses their property as security for your loan.

“When you have a guarantor, lenders are more likely to let you borrow more money so if you default and can’t pay your loan, they can sell that property as well as yours to recoup their losses,” he said.

“Alternatively, one can buy as a ‘rentvestor’ − an investor who owns property but continues to live in rental property. The combination of rental income and potential tax breaks saves valuable additional cash, while allowing you to maintain your lifestyle by living in an area where you cannot purchase.”

Single Aussies may need to consider going out to regional areas to be able to afford to buy. Picture: Supplied: News Regional Media

Research released this week from The Great Southern Bank also found around a third of 1000 Aussies surveyed had bought on their own or were looking to do so.

NSW respondents were the most likely to go it alone and at much higher rate than other states, with Victorians least likely to buy solo.

Meanwhle, Ms Haddow recommends working backwards when looking into buying a home, so research how much you can afford on a mortgage and then calculate the deposit needed.

Tips for saving a deposit

1. Record and analyse your expenses to explore how much and where you could be saving

2. Prepare a budget and stick to it

3. Pay off your outstanding debt on credit cards or personal loans

4. Look around for saving accounts with high and consistent rates

5. Set up automatic deposits into a savings account

6. Look for ways to boost income and cut back on expenses such as living with family