Getting a mortgage as a foster carer may seem difficult if you haven’t taken time to analyse your options properly and speak to a good mortgage broker.
Getting an income as a foster carer is very much possible. You will need to display two key things to the mortgage lender for you to get a mortgage offer as a foster carer.
- A stable income
- A history of stable employment
Can I use foster care income to qualify for a mortgage?
Any income you receive for foster care can be used towards your income for a mortgage.
You will likely need 2 years of history as a foster carer.
Some mortgage lenders will allow you to use 100% of your foster income but there are other mortgage lenders who may place a restriction on how much of your foster income you can use to get a mortgage as a foster carer.
Some mortgage lenders (especially high street mortgage lenders) may ask you for your net income after deducting your foster care allowance) and this will leave you with an income which is smaller than what you are in receipt of.
How do I evidence my income for a mortgage as a foster carer?
Most mortgage lenders will like to see at least 3 months worth of bank statements and they will also like to see remittance forms from your fostering service.
The proof of income required will vary from mortgage lender to mortgage lender and if you have a unique case then your mortgage broker may be able to advise you on which mortgage leders are best suited to your case.
What if I have bad credit will I be able to get a mortgage for foster carers?
If you have bad credit then you may find it hareder toget a mortgage as a foster carer but this doesnt mean it is impossible. There will still be a range of mortgage lenders willing to offer you a mortgage.
A bad credit mortgage broker may be best suited to advise you on your options in this case.
What deposit will I need to buy a home as a foster carer?
The deposit for your home will be the same as any other. It all depends on your mortgage lender but you will require a 5% mortgage deposit to assess some of the mortgages available.
This is the same amount of mortgage deposit you may require as a self-employed borrower.
How long do I need to have been fostering for?
Most high street mortgage lenders will insist that you have been fostering for at least six consecutive months.
However, if you have been fostering for less than six months then there are some mortgage lenders that may consider this and offer you a mortgage but this will likely be at less competitive rates.
Can I re-mortgage my home as a foster carer?
Yes, you may be able to remortgage your home as a foster carer. You should speak to a mortgage broker to see what your remortgage options are and what the timeline of your remortgage could be.
You may be able to raise some income for home improvements or consolidate your debts with a remortgage.
You may need to seek out a mortgage lender who accepts 100 per cent of your fostering income though.
Can I purchase a Buy-to-Let property as a foster carer?
Yes, you may be able to get a buy to let property as a foster carer. However, you will likely require at least a 25 per cent deposit for a Buy-to-Let property.
Government schemes with mortgages for flats
You may be able to use a government scheme to enable you to get a mortgage for a flat by reducing your total cost of purchase or by increasing your mortgage deposit.
- Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
You may also be able to use a host of mortgages with the help of your family.
They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or the post office family link mortgage.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.