The challenges of re-entering the housing market post-divorce are a pressing issue for many, especially women. With the soaring cost of housing, the dream of homeownership often turns into a daunting reality for those going through a divorce.
Women, in particular, face unique barriers. Many find themselves with lower incomes due to caring for children, making it difficult to secure a mortgage on their own. Financial advisor Karen Eley highlights strategies to improve the chances of returning to homeownership, but acknowledges that for many women, renting may be their long-term reality.
Kes Ball's story is a testament to this struggle. Despite her efforts, the rapid increase in house prices in Newcastle has made homeownership seem increasingly out of reach.
"When we separated, we had a lovely home with a pool. Now, I can't even afford a deposit, and I've been renting for seven years," she shares.
The path to saving for a deposit can be a long and stressful journey. Ms. Ball fears it may take decades, impacting her and her daughter's financial stability.
But here's where it gets controversial: even if women receive a larger share of assets in a divorce settlement, their lower incomes often make servicing a mortgage a challenge. According to a government report, the average 25-year-old woman with children can expect to earn $2 million less over her lifetime than a man in a similar situation.
Ms. Eley explains that banks consider credit scores and income when assessing loan applications. "If more than 30% of your net income goes towards mortgage repayments, it can cause financial stress," she warns.
She advises separating individuals to know their financial circumstances and have their own bank accounts to demonstrate saving capacity.
The impact of rising house prices post-pandemic has made purchasing a home even more difficult. Professor Stephen Whelan of the University of Sydney has studied the link between house prices and divorce rates. While the 2023 divorce rate was the lowest since the mid-1970s, Professor Whelan suggests that house prices play a significant role in the decision to separate.
And this is the part most people miss: some couples choose to hold onto their family home for years until their children are older, while others seek family support for deposits or mortgage help.
Single parents are eligible for the government's 2% home deposit scheme, but only if they are divorced. Fiona, who is separated but not divorced, advocates for more flexibility, stating that divorce would eat into her savings.
Mortgage broker Caroline Mundey, who specializes in helping women post-marriage, offers valuable insights. She warns that the rising housing costs may create further barriers for those eligible for the 2% deposit scheme. The federal government's upcoming Help to Buy Scheme aims to address this by contributing 30% to the cost of an existing home or 40% for a new build for buyers with a 2% deposit.
Ms. Mundey suggests having financial advisors and mortgage brokers work alongside divorce lawyers to navigate the best settlement for homeownership.
So, what do you think? Should there be more support for those facing these challenges? Share your thoughts in the comments!
