The current assessment should be “reviewed and adjusted,” it is suggested
Single Parent Family Home Guarantee rolled out on July 01, but it isn’t “as popular as the Federal Government expected” due to its rigid assessment criteria, according to Parents Beyond Breakup (PBB).
The plan was created to push 10,000 single parents into homeownership, but PBB called for a change in home lending rules to maximise the number of people who can take advantage of it.
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Under the scheme, eligible single parents can apply for a mortgage with just a 2% deposit for property worth $500,000 or less in Perth, and $400,000 or less in regional Western Australia, before it expires on June 30, 2025.
A single parent must earn less than $125,000 a year and not already own a property to be eligible.
Gillian Hunt, chief executive officer at PBB, told The West Australian that banks considered each child a full-time dependent of a single parent, regardless of a shared custody arrangement.
Because of this, banks considered some single parents poorer than they are, disqualifying them for larger loans or leaving them susceptible to higher interest rates.
“We believe there is likely to be a lower uptake of this scheme due to the issues single-parent families will have with the assessment process of obtaining the mortgages,” Hunt said. “The assessment criteria for single-parent families, including income, living expenses and dependent child calculations, should be reviewed and adjusted to make the scheme accessible for more single parents.”
Notwithstanding these hurdles, Hunt noted that the Single Parent Family Home Guarantee is still effective in spotlighting a critical demographic of homebuyers with unique needs.
According to PBB, nearly one million Australian children live in a separated home. Moreover, the Australian Institute of Family Studies revealed that half of all single parents rented their homes in 2018.
“In this scenario, having the funds available to invest in a home is often extremely challenging,” Hunt said. “Parents play such a critical role in our society, so helping those in distress through family breakdown – whether through homeownership or other support – is completely worthwhile for our society in general.”
