Getting a mortgage can be tricky, especially for foster carers. Many lenders don’t fully understand the unique income structure and allowances that come with fostering.
At present, there are over 70,000 foster children across the UK living with over 55,000 foster families and caregivers. On top of that, the demand for foster families shows a growing trend every year.
Unfortunately, most foster carers have to face a lot of trouble while trying to get a mortgage.
However, rest assured, as a foster carer, you can indeed secure a mortgage. This blog post will delve into the intricacies of mortgages for foster carers, providing expert information and shedding light on how to navigate this complex process.
We’ll explore different lenders’ approaches, discuss affordability tests, and how your fostering allowance can contribute to your qualifying income.
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Is It Possible To Get Mortgages As A Foster Carer?
Yes, it is entirely possible to get a mortgage if you work as a foster carer.
The basic principle for getting a mortgage is the same for everyone, including those who are involved with fostering where you have to meet the lender criteria in which you are applying.
As a matter of fact, the income generated from fostering could help you to get better mortgage deals and can even enhance the efficiency of the application process.
Unfortunately, a lot of high street mortgage lenders do not fully understand the fostering system.
As a result, they may often feel reluctant to approve a foster care mortgage or take the fostering income into account.
Why Foster Carers Have Difficulty Getting a Mortgage?
Due to the nature of fostering work, the income may feel a bit inconsistent at times. That is why many foster carers have other jobs to supplement their fostering incomes.
In other words, a foster carer can work in fostering while simultaneously working at a full-time job, thereby getting income from two different sources.
However, a lot of lenders today are arguably unable to fully understand this aspect. As a result, there is a lot of variance in how lenders perceive foster care incomes. Some may consider 100% of the foster care income, while others might ignore it completely.
If it is the latter, then the lender will calculate your affordability based on the income from your full-time job only, provided you have one so they may not be the right lender for your circumstances.
In case you don’t have that, the lender may consider income generated from other sources, such as benefits, certain investments or other self-employment activities.
At first glance, it might not feel like that much of an issue. But it can affect the amount you can borrow from the lender. To be more precise, if the mortgage provider ignores your fostering income, then your total annual income will be reduced, which will limit the money you can borrow.
For example, let’s say that you make £25,000 from your full-time job and £10,000 from fostering.
A considerate lender that takes fostering incomes into account will mark your annual income to be £35,000. Subsequently, they may allow you to borrow four and a half times the money for your mortgage, which comes out at around £157,500 if we use a simple rule.
In contrast, if the lender ignores the fostering income, then your annual income will only be £25,000. So, the money you can borrow in this case will be £112,500, which is considerably less.
How To Prove Foster Carer Income?
Whenever you apply for a mortgage, the lender will ask for proof of income. It is a crucial step for assessing affordability, which means that it is applicable to everyone, and not just foster carers.
However, if you are involved with fostering, you may have some trouble with this aspect, as we have discussed in the previous section.
You will need to provide the usual income documents and bank statements, along with remittance notices for foster care.
Alternatively, you might need to provide evidence of your income and tax returns via SA302s. This is because many lenders may consider foster carers to be self-employed, which is where SA302s are applicable.
Aside from that, you might need to provide supporting documentation to prove that you are a foster carer. This documentation is generally a letter from the local foster agency or regulatory authority, and it helps to confirm your fostering arrangements for the foreseeable future.
In addition to the above, some lenders may have some fostering duration requirements. They may only approve mortgages for those who have been working as foster carers for at least six months.
Mortgages for foster carers are very lender dependent and so we can’t stress the importance of a suitably qualified mortgage broker.
How To Get Mortgages for Foster Carers
It is important to note here that there is no distinct mortgage type for foster carers. What we mean to say is that the mortgages available to foster carers are the same as the mortgages available to everyone else.
Therefore, the process for getting a mortgage as a foster carer is the same as the process for getting a mortgage as any other professional. The only difference lies in the income evaluation process, which we have discussed previously.
First, you will need to research the market to find a suitable lender. Obviously, you will need to consider the type of mortgage you want, such as buy-to-let, residential, commercial and so on. This is crucial since it will help you find the best lender that suits your mortgage requirements.
Ideally, we recommend researching both high-street and specialist lenders. This will broaden your scope and help you find a mortgage provider who is more considerate of the needs of foster carers.
If you wish, you can seek help from a qualified mortgage broker as discussed. These individuals have extensive knowledge and access to the market, which means that they can refer you to a suitable lender easily. That can save a lot of time and effort, thereby making the process more convenient.
Once you have finalised this aspect, you should get in touch with the lender. Make sure to gather all the relevant documents beforehand. After that is done, you can initiate the mortgage application process.
How Much Deposit Do Foster Carers Need To Pay?
When it comes to the initial mortgage deposit, foster carers are treated the same as everyone else.
This means that they can get mortgages with deposits as low as 5%, which is the lowest possible deposit amount for mortgages in the UK.
However, we strongly suggest going for a higher deposit amount, provided you are able to afford it as theoretically this should reduce the rate and give you more equity within the property.
Alongside helping you to find better mortgage deals with attractive interest rates. Also, it will reduce the monthly repayment amount, which will make it easier to manage financially.
Can Foster Carers Get Mortgages With Bad Credit?
Credit scores are an important indicator of financial reliability, which is why most lenders take it into consideration while assessing an application.
So, if you have a poor credit score, it might make it more difficult to get a mortgage as a foster carer.
Fortunately, there are some strategies you can follow to get a mortgage with bad credit. With these strategies, you can improve your credit score/profile, which will allow you to get a mortgage more easily.
Conclusion
We’ll admit – working as a foster carer is not easy at all. Caring for children who cannot live with their birth families is truly a noble deed. And with the number of such children on the rise, fostering is the need of the hour.
That is why foster carers need mortgages to purchase property that can aid with their fostering work. So, if you are involved with such work, you can use the information in this guide to help buy property.
Of course, if you need additional guidance, you can seek help from a broker or financial advisor, too. These individuals can carefully analyse your situation and provide tailored solutions to make the mortgage process as smooth as possible.
Your home may be repossessed if you do not keep up repayments on your mortgage.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
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