Dreaming of owning your own home but worried about being on Centrelink? Don’t fret! While securing a home loan with Centrelink as your primary income can be a tad trickier, it’s definitely not impossible. This guide will navigate you through the process, highlighting what you need to know and how to boost your chances of success.
Can You Get a Home Loan on Centrelink?
The short answer is yes, you can get a home loan on Centrelink, but it depends on the specific benefit you receive and the lender’s policies. Some lenders accept certain Centrelink payments as a form of income, while others may require additional income sources.
Here’s a breakdown of Centrelink benefits typically accepted by lenders:
✅ Accepted as a secondary income:
- Age Pension
- Carer’s Allowance
- Disability Pension
- Foster Care Allowances
- Overseas Pension (specific countries)
- Veterans and Widows Pension
✅ Accepted as a primary income:
- Family Tax Benefits (Part A & B)
- Child Support
❌ Not typically accepted:
- Newstart Allowance
- Youth Allowance
- Parenting Payment
- Sickness Allowance
Pro Tip: Always check with the lender directly to confirm their specific policies regarding Centrelink benefits.
How to Increase Your Chances of Approval
While being on Centrelink may present some challenges, there are ways to increase your chances of securing a home loan:
1. Boost Your Deposit:
A larger deposit demonstrates financial stability and reduces the loan amount you need to borrow. Aim for at least 20% of the property’s value to avoid Lenders Mortgage Insurance (LMI).
2. Secure a Stable Second Income:
If your Centrelink benefit is considered secondary income, having a reliable second income source, like a part-time job or rental property, can significantly improve your application.
3. Choose the Right Lender:
Some lenders are more open to working with Centrelink recipients. Research and compare different lenders to find one that aligns with your circumstances and offers competitive rates.
4. Get Your Documents in Order:
Gather all necessary documents, including bank statements, payslips, and Centrelink payment statements, to expedite the application process.
5. Work with a Mortgage Broker:
A mortgage broker can guide you through the process, find the best loan options for your situation, and negotiate with lenders on your behalf.
6. Maintain a Good Credit Score:
A strong credit score demonstrates responsible financial management and increases your chances of approval and securing favorable interest rates.
7. Be Realistic:
Understand that lenders may impose stricter borrowing limits or require a guarantor if you’re on Centrelink. Be realistic about your budget and borrowing capacity.
Additional Tips for Success
- Be upfront and honest: Inform the lender about your Centrelink income and provide all relevant documentation.
- Explain your financial goals: Demonstrate how owning a home aligns with your long-term financial plans.
- Highlight your financial stability: Showcase any additional income sources, savings, or assets you possess.
- Be prepared to answer questions: Be ready to explain your spending habits and how you plan to manage your mortgage repayments.
While buying a house on Centrelink may require extra effort, it’s achievable with careful planning and preparation. By understanding the process, boosting your financial profile, and choosing the right lender, you can turn your dream of homeownership into a reality.
Why compare home loans with Savvy?
We don’t charge you anything to compare house loans, so you can do it whenever you’d like.
Without having to deal with mountains of paperwork, you can complete a quick online quote using our form.
With a panel of reputable mortgage lenders behind us, you can rest assured youll be comparing high-quality options.
How much will I have to pay for a deposit on my property bought with a Centrelink home loan?
Contrary to popular belief, potential borrowers on Centrelink have access to a loan-to-value ratio (LVR) of up to 2095% on their home loan in the appropriate situations. The loan-to-value ratio (LVR) that your lender is willing to grant you will primarily depend on your credit history and future ability. For example, if you apply for a $2095% LVR when you’re in a sticky financial situation, you’re likely to be approved. However, a lender may determine that a comparable loan is within your means if you receive Centrelink payments in addition to your income and your partner makes a sufficient living on their own.
You can use your combined or sole income to calculate the potential value of your deposit and determine what size deposit you can afford. If, for instance, you have enough money to put down a $20,000 deposit and still have money left over, you could theoretically be approved for a loan on a $400,000 property provided certain financial requirements are met.
Buying a house – How the banks look at Centrelink payments.
FAQ
How much money can you make before it affects your Centrelink?
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Family situation
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Payment reduces to zero once your income reaches this amount per fortnight
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Single, with a dependent child younger than 16, but not the principal carer
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$1,545.00
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Partnered
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$1,344.67 for your income. $2,522.00 for your partner’s income when you have income less than $150.
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Can an aged pensioner get a home loan in Australia?
Can I get a home loan on Centrelink?
While Centrelink itself does not offer home loans, many lenders accept Centrelink payments as part of your income, which can help you qualify for a home loan. So If you’re wondering, can I get a home loan on Centrelink, Yes, you can get a home loan on Centrelink. However, eligibility varies among lenders, and certain criteria must be met.
How can Centrelink help you buy a home?
Centrelink’s Influence: Benefits like the Family Tax Benefit can play a role in home loan applications, but lender criteria vary. Family Home Guarantee Scheme: This initiative can complement Centrelink benefits, aiding single parents in their home-buying journey.
Can a single parent buy a home on Centrelink?
To qualify for a home loan as a single parent on Centrelink, you need to meet certain eligibility criteria set by the participating lender. These criteria may include factors such as your income, credit history, and the stability of your Centrelink payments. 4. Can I use government assistance to help me buy a home?
What happens if I receive a Centrelink payment?
People who receive Centrelink payments will be subject to the same criteria as other applicants when applying for a home loan. If you have a relatively small deposit saved then you may be charged lenders mortgage insurance, which could add to the cost of your home loan. What is a Centrelink home loan?