Mortgages for Foster Carers
Mortgages for Foster Carers
Mortgages for foster carers can create some unique challenges. You need to approach a lender that understands fostering and the income and allowances that come with it.
Last updated: 24th July 2022
Can foster carers get a mortgage?
Yes, absolutely. Foster carers can get mortgages. The difficulty arises because different mortgage lenders treat foster carers, and their fostering income differently. Most just use your taxable income and don’t understand your fostering allowance. That’s why it’s important to work with a mortgage broker who does understand this to match you with a foster income friendly mortgage lender. Without this the amount you can borrow could half.
Is foster care income usable for a mortgage?
Yes, some lenders will consider mortgages for foster carers and count your fostering income, but not all of them.
There are huge differences between how each mortgage lender treats foster carers.
Do all lenders treat foster carers the same?
No. Some lenders will not take into account your income from fostering at all when considering how much they will lend to you. What’s worse is that they may still reduce what you can borrow as they’ll count your foster children as dependents.
A few lenders will consider your foster income like a self employed person’s income. They normally need at least two years tax calculations showing your foster income and they may only consider a fraction of your full allowance.
Finally, there are some very foster carer friendly lenders that will consider your fostering allowance based on the last six months.
Which lender is best for mortgages for foster carers?
It varies from person to person depending on your circumstances, and what your goal is. Some fosterers will find that they don’t need a lender that will consider their foster income at all. Some people will be able to get the best deal with a lender that considers just a fraction of their foster allowance, and some foster parents will need to use a lender that considers all of their foster income.
Mortgage are available whether your are moving, remortgaging, or a first time buyer.
Do foster carers get higher interest rates?
Not necessarily. Some lenders treat foster carers are treated like any other borrower and have access to the same mortgage products, so long as you can prove your mortgage affordability.
As there are some lenders that wont count income from fostering when deciding what you can borrow, this might mean that the lenders with the lowest rates won’t lend you enough. This is why you should have a professional look at your circumstances and match you to a lender that will use just enough of your fostering income to get you the best rate you can get.
It’s recommended to speak to mortgage advisers that are familiar with fostering to save time and make sure you still get a competitive rate.
How long do I have to have been a foster carer to get a mortgage?
There are some that will consider your foster income if you have only been fostering for six months.
Unfortunately, most high-street lenders want you to have been fostering for two years in order to consider your foster allowance.
You’ll be asked for letter from the local authority or fostering agency to prove your income over this time.
What deposit is needed for a foster carer mortgage?
Foster carers will need the same deposit as any other borrower. At the moment the minimum is 5%, the larger the deposit you have, the more and cheaper mortgages you have access to.
If you’re looking for a buy to let mortgage then you’ll typically need a 25% deposit. Though you could raise this by taking a mortgage on your own home.
What evidence is needed to use foster income?
This varies between lenders. Some will want to see two years tax calculations and tax year overviews as they treat you as self-employed.
To prove your fostering allowance you’ll be asked for letter from the local authority or fostering agency to prove your income over this time.
The most foster friendly lenders ask for your last six months remittance slips.
How much money can a foster carer borrow?
The examples below show the extreme differences that lenders will consider allowing a foster carer to borrow. The examples assume a household of two adults with no debts that have been fostering for 12 months.
Income from employment
Number of children
High street lender
Foster friendly lender
After two years fostering the high street-bank would consider lending more, but not as much as a foster friendly lender.
The only way to know for sure is to get in touch with a mortgage broker that understands fostering income and allowances.
Are there mortgages for foster carers with bad credit?
Yes. Some lenders will consider you if you have some bad credit but they may require you to have been fostering for longer.
Ultimately it will depend on your credit history.
Your home may be repossessed if you do not keep up repayments on your mortgage
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