As a foster carer, it’s important to find mortgages for foster carers to secure a home that is safe and secure for the children you will be fostering. It’s also ideal for homes to be placed in neighbourhoods that are in close proximity to schools, parks, and playgrounds; and with these amenities comes a spike in demand, and price.
But are foster carers a risky investment for lenders? Foster carers are no less of a risk than any other borrower. We discuss the challenges carers face when it comes to obtaining a mortgage and the likelihood of obtaining a mortgage with low-interest rates.
Can you get a mortgage if you are a foster carer?
Yes, you can get a mortgage as a foster carer, so long as you meet the requirements set out by the lender. One of the main factors in determining whether an individual is eligible for a mortgage is a secure income stream.
As a foster carer, it is common for your income to fluctuate based on the number of placements you have at a given period. In a lender’s eyes, a fluctuating income can indicate a risky investment.
Most lenders will calculate and evaluate your net profit after deducting your foster care allowance. The end result of this calculation could have serious implications for the affordability score. This is why it would be essential for you to contact a mortgage specialist to ensure that you find a lender who treats your foster allowance as a form of income. At AMS, we use your full fostering income to secure a loan for you as if you were an employee.
Requirements for mortgage allowance as a foster carer
Listed below are some of the main requirements:
- You will need to have been fostering for at least 6 months.
- Proof that you will continue fostering for the foreseeable future; a letter will need to be obtained from the fostering agency or local authority.
- Provide copies of your last 3 months of remittance slips from your employers.
- Provide 3 months’ worth of bank statements.
As a foster carer, you may be required to pay the same deposit percentage as someone classified as self-employed. Most lenders will require a minimum 5% deposit.
Why are mortgages for foster carers tough to get?
Raising a child requires more time and effort than most jobs; while rewarding, it is an expensive task that often requires carers to reduce their working hours which in turn reduces their salary.
As a way to combat the loss of income, foster carers are provided with an allowance that helps support the upbringing of each child. While salaries vary, foster carers are typically paid a minimum of usually between £134 and £235 a week. Factors such as emergency placement, and short-term, or long-term foster care affect the total amount, as well as your physical address, the child’s age and specific needs, and your skill level.
The issue with these fluctuating incomes is that it makes it harder for lenders to assess affordability and how much carers can pay off each month.
Do foster carers get credit checked?
Anyone who is applying for a mortgage will need to undergo a credit check, which is performed by lenders or mortgage specialists. Lenders assess the creditworthiness of borrowers to evaluate their ability to repay the loan. Credit checks help lenders determine the risk associated with lending money. Therefore, foster carers can expect their credit history to be reviewed during the mortgage application process.
If your credit score is high, you are in line for the best mortgage deals with lower interest rates. If your credit score is poor, you may be declined a mortgage or find it hard to find one without astronomical interest rates.
Can I get a foster carer’s mortgage with bad credit?
While it is more difficult, you can still get a mortgage with a bad credit score. In order to better your chances of being approved for a mortgage, you will need to consult a mortgage specialist who can advise you on how to approach lenders correctly, how to improve your credit score and how to get you the best interest rates.
AMS mortgage specialists have secured mortgages for foster carers who have been bankrupt or in an IVA within the last 6 years. Visit our main foster carers page by clicking this link.
Speak to an expert on foster carer mortgages today
Finding the best lender for mortgages for foster carers can be challenging. If you’d like help finding the best lender or gaining some insight from our experts who have years of experience, call us on 0121 4000 052 or make an enquiry. We’ll point you in the right direction.