Mortgages for Foster Carers

Finding the best mortgage as a foster carer can be tricky, as many lenders will not include your fostering income when assessing affordability. But with the right advice, there is no reason why you can’t get a competitive rate on your home loan as a foster carer.

In this article, we’ll explain how foster carer income can be included in a mortgage application and why speaking to a broker is the best way to maximise borrowing power and minimise repayments.

Can you get a mortgage as a foster carer?

Yes, it’s possible. Foster carers can get approved for a home loan in the same way as anybody else provided they meet a lenders’ eligibility criteria and can show that the repayments are affordable.

And in some cases, foster carer income can enhance an application and result in better rates that could cut thousands off the overall cost of borrowing. However, that’s unlikely if you approach most high street lenders who are often reluctant to take this income into account.

How foster carer income is calculated

Each mortgage provider has its own attitude to foster carer income. Some will not include it at all in assessing affordability, others will factor in a capped percentage, and some will use 100%.

Likewise, some lenders only include part of other income sources, such as self-employed work or benefits. That’s why finding a lender sympathetic to your circumstances is crucial.

If you go to a lender who either doesn’t consider foster carer income or caps it, this can negatively impact your borrowing capacity.

This is because mortgage providers calculate the maximum amount you can borrow using income multiples. Typically, they multiply your eligible income by between four and five times to work out your maximum loan amount.

So, for example, if your total household income is made up of a £30,000 salary and £22,000 of foster carer income:

• Without foster carer income, you could typically borrow up to £135,000 (£30k x 4.5)
• With foster income included, your borrowing capacity could rise to £234,000 (£52k x 4.5)

Use our calculator below to see how this could work out for you based on your income:

Evidencing foster carer income

How you prove your income is also important in determining the outcome of your application.

Some lenders will classify you as self-employed and ask for your SA302s (tax returns). This means they calculate affordability based on your net profit after expenses have been deducted.

It’s preferable to find a lender who assesses foster carer income using your remittance notices. They will calculate it before expenses, which will increase your borrowing capacity and affordability.

It’s also common for lenders to ask for a letter from the local authority or foster agency that confirms your fostering arrangements will continue. Some will only ask for confirmation it will carry on for the foreseeable future while others stipulate a specific time (i.e. five years).

With most (but not all) lenders, you will need to have been a foster carer for at least six months to get approved for a loan.

Which lenders allow this?

If you’re a foster carer who has struggled to get a mortgage, it might surprise you to hear that there are more UK lenders that accept foster carer income than there are that don’t. But each has its lending criteria, which could have seen your application rejected on a technicality.

High street banks that will accept foster carer income to assess mortgage affordability include:

• Barclays
• Natwest
• Santander
• Nationwide

However, the best deals are often found with specialist lenders with a more flexible approach to underwriting and, in many cases, don’t have a high street presence.

How a broker can help you get a better deal as a foster carer

Getting the best deal for your circumstances requires in-depth knowledge of this niche market. Applying blindly will likely result in rejection or approval for a lower amount than you need.

A mortgage advisor who specialises in foster carer mortgages will be able to help you navigate the complexities of the market and find the deal that suits you best.

Call today or enquire online to talk to us about connecting you with a broker who understands your situation.

What if you have bad credit?

You can still get a mortgage even with bad credit—your options will be more limited, and the rate you’re offered will be higher.

Much will depend on the severity of your bad credit, when and why it occurred, and whether the issues are resolved.

Fortunately, bad-credit mortgage providers tend to have more flexible underwriting criteria, and there is a good chance you’ll be able to use your foster carer income to strengthen your application.

Is there help available for foster carers applying for a mortgage?

Yes, there can be. Some lenders have preferential eligibility criteria for certain professions, and in many cases, this includes fostering.

There are also several government schemes that you may be eligible for, depending on your circumstances. While these are not targeted specifically at foster carers, they are designed to help struggling people move or get on the housing ladder.

They include:

• First Homes 
• Shared Ownership
• Right to Buy

Get matched with an advisor who specialises in mortgages for foster carers

With so many complexities and variables to consider, getting expert advice from someone who understands this market makes sense.

We work with brokers with access to the entire UK mortgage market and operate in niche fields such as mortgages for foster carers. Our unique broker matching service will assess your circumstances and put you in touch with the specialist broker most suitable for your situation.

To get matched with your ideal broker call today on 0330 818 7026 or enquire online.