Foster carers have a duty to safeguard and promote the welfare of the children placed in their care. This can be challenging, but foster carers often develop strong bonds with their charges and many enjoy the experience enough that they look to providing long term fostering for them [or other children].
The problem with this is that although your heart may be set on adopting, or you plan to provide full-time foster care for some of these children, lenders are more likely to see it as a phase that will end. As a result, getting approval for the mortgage you need can be very difficult. If this applies to you, there are still ways of making it work with some perseverance!
Can I get a mortgage based on my income as a foster carer?
Yes, you can, Some lenders will allow you to use 100 per cent of your fostering income as the basis for a mortgage. This is likely to be more appealing than considering your household income, which will usually include your partner’s wage too – and consequently, a higher total monthly outgoings figure as a result. If you have only been fostering for a short time, however, you may find that this option isn’t available to you.
Foster Carer Mortgages
This means that any income received from being a foster carer will normally only count towards the mortgage if it joins up with salaries from other sources such as working part-time outside of fostering. Income received from foster careering will normally have to be supported with a secondary income, this may come in the form of part-time work or a partners income. There are however some lenders that will solely accept 100% Foster Carer income for the affordability of the mortgage.
Fostering income benefits
One way to increase your income is by applying for a foster carer’s allowance that is paid directly into your bank account. This comes in three different forms; basic, daily living and special. You should be able to get this if you plan on caring for children or if you are caring for adults who are physically disabled or over 65 years old and their fostering income is no more than £195 per week. Once you start receiving the allowance, any wages from other sources will then be counted against the repayments on your mortgage when it comes to assessing whether or not, as foster carers, you can afford one.
Get in touch with the team at TF Financial Advisors to speak about foster carers mortgages.
What deposit will I need to buy a property?
As you can see, a mortgage approval as a foster carer is based on a number of factors. Foster carers mortgages are not straightforward and there can be several different reasons why you find it hard to get one. Usually, this is due to lenders being cautious about the fact that they believe that fostering could just be a temporary thing rather than something that will last long term.
The good news for foster carers is if you approach other lenders or apply with another lender for the same mortgage using your fostering income from other sources (as mentioned above) then you might get the approval and help that you need. Mortgages come in many shapes and sizes so make sure you budget carefully and consider which options are going to work best for your situation when applying for a foster carer mortgage. As a foster carer, you will require a minimum five per cent deposit for a foster carer mortgage, but this can vary depending on the requirements of the lender and the loan in question.
How long do I need to have been fostering for?
All mortgage lenders will have their own guidelines when considering mortgages for foster carers and it’s best to get in touch with them directly. As a rule, most mortgage lenders will ask for a period of between 6 months to two years before they will consider making a foster carers mortgage application. This is because the lender wants to make sure that you are serious about fostering and therefore the chances are that you will continue doing it for longer than just one or two years.
How do I evidence my income as a foster carer?
Evidence of your fostering income will be expected when you are applying for a mortgage if the majority or all of your income comes from foster care. You can expect to have to provide three months of bank statements showing an average balance of at least £1,500 per month and payment slips as proof that you receive tax credits if this is one of the sources of your income as a foster carer.
You may also need to provide the names and contact details of referees such as a personal or business bank manager, employer or the person who will be signing on behalf of the mortgage lender if you are buying a property with another person in order to demonstrate financial commitment.
As a first time buyer and a foster carer, can I use the Help to Buy scheme?
Yes, you can apply for the Help to Buy scheme to get mortgages for foster carers if you are both a first-time buyer and a foster carer. The Help to Buy: equity loan scheme is designed to help people like you who wouldn’t be able to buy their own home without some extra help. You will need at least five per cent of the property value in cash.
Can I re-mortgage my home?
Yes, you can re-mortgage your home if you are a foster carer. However, before you do this, it would be wise to consider how much equity there is in the property and whether or not another lender might be willing to offer you a better deal with lower fees and interest rates than your current mortgage provider. Mortgages for foster carers can sometimes come with a lot of fees, so you will need to make sure you compare and shop around.
With the current environment in the financial world, it seems that Mortgages For Foster Carers are a more difficult process than for conventional home buyers.
Can I purchase a Buy-to-Let property as a foster carer?
Yes, you can get a mortgage. However, you will likely require at least a 25 per cent deposit if you are intending on using your Home-Buy Mortgages For Foster Carers scheme as the equity loan is only available once.
Yes, you can get a mortgage. However, you will need at least a 25 per cent deposit if you are intending to borrow from a mainstream lender. This will be subject to the lender criteria of rental income, affordability and homeowner status.
What happens if I change my mind?
If you do decide that after taking on fostering as a career choice that it is not what you expected or wanted to do, there is no need to worry. You can hand back your fostering allowance but it must be returned within three months before any repayment requests will be considered. You can also choose to give up the fee.
What do Mortgage lenders look for from Foster Carers?
A mortgage lender often requires evidence of stable income to ensure their mortgage borrowers will be able to afford a mortgage repayment. Mortgage lenders look for self-employed Mortgage applicants who can offer proof of income reports, usually through a profits and loss account or an income and expenditure statement.
Mortgage affordability as a full-time carer
As a foster carer, one of the challenges you may face is finding ways to finance your mortgage when caring for children and young people. Mortgage brokers usually require at least two to three years’ worth of returns for an applicant with no previous income history. This can be difficult if:
- You have only been in your current foster placement for a short time (for example, if you have only been fostering for a few months)
- You’ve taken a break from work to care for the young person
- You have had a recent change in circumstances
- You have recently been on universal credit
- Have a poor credit score
- You do not have a mortgage deposit
- You have difficulty proving your annual income
For example, if you were raising funds for a deposit for a house and then took on a young person to care for, you may not now have sufficient funds saved for the mortgage.
Foster Carer Mortgage Specialists
Financial Advice for Foster Carers can be found from a mortgage broker, mortgage advisor, high street lenders or bank. Mortgage Advisors are more likely to specialise than Mortgage Brokers because Mortgage Brokers don’t actually provide services directly to the consumer – Mortgage Advisors do!
“Financial Advice can be found at TF Financial with one of our expert Mortgage Brokers. We have a proven track record in helping clients who require specialist mortgages, such as Foster Carers.
As foster carer mortgage specialists we will be best suited to provide financial advice and have lender criteria to hand when you make an enquiry about mortgage advice. Seeking advice from a friend does not constitute financial advice, making sure you can afford the mortgage interest payments and selecting the best financial services for your situation is best.