Mortgages for Foster Carers

Finding the best mortgage as a foster carer can be tricky as lots of 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 their own attitude to foster carer income. There are those who will not include it at all in assessing affordability, others that factor in a capped percentage and some who will use 100%.

Likewise, there are lenders who will only include part of any other income sources such as self-employed work or benefits. That’s why it’s crucial to find a lender who is sympathetic to your circumstances.

If you go to a lender who either doesn’t consider foster carer income or caps it, this can have a negative impact on 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 own income:

Evidencing foster carer income

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

Some lenders will class you as self-employed and ask to see your SA302s (tax returns). However, this will mean 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 as 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 do accept foster carer income than there are that don’t. But each has its own lending criteria which could have seen your application rejected on technicality.

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

• Barclays
• Natwest
• Santander
• Nationwide

But the best deals are often to be found with specialist lenders who have 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 particular circumstances requires in-depth knowledge of this niche market. Applying blindly is likely to result in rejection or being approved 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.

To talk to us about putting you in touch with a broker who understands your situation, call today or enquire online.

What if you have bad credit?

You can still get a mortgage even with bad credit – you’ll just find that your options are more limited and the rate you’re offered is 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 be those with 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 some 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 people who are struggling to 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, it makes sense to get expert advice from someone who understands this market.

We work with brokers who have 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 0808 189 2301 or enquire online.