Single parents or partners find it extremely difficult to apply for and get a loan. Almost all the lenders will look at your situation differently than when you were two with your partner or spouse. One fact that you need to realize is that being single makes you solely responsible for everything really, especially how you manage your finances and Lendgreen loans.
Even the banks see couples as being more stable enough as borrowers to pay off a loan compared to the single partners. The reason for this is that banks can always fall back on the other partner to carry the loan if anything happens to one of the two.
As a single party, you will find it difficult and taxing even to manage to save up for the 5% deposit. Your borrowing power will also be cut significantly.
What to do
Okay, maybe you are single and do manage to land a mortgage. But what happens when the interest rates on the mortgage go up. Will you be able to cope with that? Maybe you can, but the stresses that will accompany that will be very high when compared to when you have your spouse to help you cover any of the rates and other expenses.
Banks also look at your job stability, how long you have been employed, and whether the job is full time or part-time.
Here are the five reasons why most lenders will probably deny you a loan as a single person.
- You don’t have enough income to pay up your mortgage repayments
Have you ever considered some factors that can hinder you from making your mortgage repayments like injury or job loss? This is what most lenders will be looking into. Lenders will consider your situation a lot harsher than they would for a couple and will limit your chances of getting a loan significantly.
- High debt-to-income ratio
Research will show you that out of every four-single people; you will find that one has more than $10,000 as credit card debt. So, try and spend less and save more if you want to have a shot at landing a loan as a single person.
- Higher living expenses with the rising cost of living
Single people tend to spend more especially when it comes to food, fuel and power, housing, and even alcohol. A study done in 2009 will show you that the average weekly spending of a single person under 35 was around $869. Whereas, couples could put some portion of their cash on savings, around $150 for a start which would rise with time.
- You’re a single mom
Many lenders, especially banks, consider single moms to be high-risk borrowers. Since moms will usually put their kids first even ahead of their jobs which are what they need to be able to pay off the loan they want to borrow.
- You are divorced!
Divorced people also tend to rack up large debts as a result of the harsh divorce settlement fees that they end up stuck with and find difficult to pay.