10 Ways to Prepare for Property Purchase After Separation

Understanding Your Position as a First Home Buyer After Separation

If you've owned property during a relationship and now find yourself looking to buy again on your own, you might be surprised to learn you could qualify as a first home buyer. For most state and territory schemes, what matters is whether you currently own property or have owned recently, not whether you've ever owned in the past. In our experience, many people assume they're locked out of grants and concessions because they co-owned the family home, but that's rarely the case once a property settlement is finalised.

Consider someone who exits a property settlement in New South Wales without retaining the family home. They haven't owned property since the settlement completed, which means they can access the first home buyer stamp duty concession on both new and established homes valued up to $800,000, with a sliding concession up to $1,000,000. In Victoria, the same buyer could access a full stamp duty exemption on homes up to $600,000 and a concession on homes valued up to $750,000, regardless of whether the home is new or established.

Queensland offers a $30,000 grant for new homes under $750,000, extended for four years from 1 July 2026. South Australia provides a $15,000 grant for new homes with no price cap, plus full stamp duty relief on new homes and vacant land. Western Australia now applies a single statewide duty threshold, with no duty payable on homes valued up to $600,000 and a concessional rate on homes between $600,001 and $800,000, regardless of whether you're in Perth or regional Western Australia.

How Much You Can Borrow on a Single Income

Borrowing capacity drops when you move from joint income to a single income, but the reduction isn't always as steep as people expect. Lenders assess your income, existing debts, living expenses, and any ongoing financial commitments including child support or spousal maintenance. If you're receiving child support, most lenders will include 80% to 100% of that payment as income. If you're paying child support, it's treated as a regular expense that reduces your borrowing capacity.

In a scenario where someone earns $85,000 a year, receives $1,200 per month in child support, has no credit card debt, and pays $400 per month in car finance, they could typically borrow between $450,000 and $500,000 depending on the lender's assessment. If that same person were paying $1,200 per month in child support instead of receiving it, borrowing capacity might drop to around $380,000 to $420,000. These figures shift depending on the lender's serviceability buffer, which is typically 3% above the current rate.

If you're unsure where you sit, a borrowing capacity assessment gives you a clear picture before you start looking at properties. It's also useful to understand how your capacity might change if you clear a car loan or close an unused credit card.

Deposit Size and Low Deposit Options

You don't need a 20% deposit to buy. The Australian Government 5% Deposit Scheme allows eligible buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. The scheme has no income caps and no annual place limits. It applies to properties under specific price caps depending on location. In New South Wales, the cap is $1,500,000 for Sydney and regional centres. In Victoria, it's $950,000 for Melbourne and regional centres. In Queensland, the cap is $1,000,000 for Brisbane and regional centres.

Single parents or legal guardians can access the scheme with a 2% deposit. The scheme is available through participating lenders only. You can't apply directly to Housing Australia. Fixed rate, variable rate, and split loan structures may be available depending on the lender you choose.

If you're buying outside the scheme, LMI applies on deposits below 20%. LMI premiums vary based on your deposit size and loan amount. On a 10% deposit, LMI might add $10,000 to $20,000 to your upfront costs. Some lenders offer LMI waivers for certain professions, including medical, legal, and accounting professionals. Others allow you to capitalise the LMI premium into the loan rather than paying it upfront.

A gift from a parent or family member can form part or all of your deposit, provided you can show it's a genuine gift and not a loan that needs to be repaid. Most lenders require a signed declaration confirming the funds are non-refundable.

Pre-Approval and Why It Matters When You're Buying Solo

Pre-approval tells you what you can afford before you make an offer. It's conditional approval from a lender based on your income, deposit, and financial position. Pre-approval usually lasts three to six months, though some lenders issue it for shorter periods. It's not a guarantee, but it gives you confidence that a lender is willing to lend to you at a certain amount, subject to a satisfactory property valuation and no material change in your circumstances.

If you're buying in a market where properties sell quickly, having pre-approval in place means you can move when the right property comes up. It also gives you a clear budget, which prevents you from wasting time looking at properties outside your range. In our experience, buyers who've recently separated often benefit from the clarity pre-approval provides, because it removes one layer of uncertainty during a period that already carries plenty.

Pre-approval requires proof of income, recent payslips, tax returns if you're self-employed, bank statements, and details of your assets and liabilities. If you're receiving or paying child support, you'll need to provide evidence of the amount and frequency. If your separation is recent and financial commitments are still being finalised, some lenders will wait until your situation is clearer before issuing pre-approval.

Choosing Between Fixed and Variable Rates

A fixed rate locks in your repayments for a set period, typically one to five years. A variable rate moves with the market and gives you access to features like an offset account or redraw facility. If certainty matters more than flexibility right now, a fixed rate might suit your situation. If you want the ability to make extra repayments or offset your savings, a variable rate is more practical.

Many buyers split their loan between fixed and variable. You might fix 50% of the loan for three years and leave the other 50% variable. This gives you some protection if rates rise, while keeping access to flexible features on the variable portion. Fixed rates generally don't allow unlimited extra repayments or full offset access, though some lenders allow capped extra repayments on fixed loans, usually up to $10,000 or $20,000 per year.

If rates are higher now than they were when you last held a mortgage, it's worth thinking about how much buffer you have in your budget. Lenders assess your ability to service the loan at a rate 3% higher than the current rate, but you should also think about whether your repayments are sustainable if rates stay where they are or climb further.

First Home Super Saver Scheme and How It Works

The First Home Super Saver Scheme lets you build a deposit inside your superannuation fund. You can make voluntary concessional and non-concessional contributions and later apply to release those amounts toward a home deposit. The contribution cap is $15,000 per financial year, with a lifetime cap of $50,000. Concessional contributions are taxed at 15% rather than your marginal income tax rate, which can make this an efficient way to save if you're on a higher income.

You need to apply to the ATO for a determination before you sign a purchase contract. The determination tells you how much you're eligible to release. Once you've signed a contract, you can apply for the release of funds. The money is paid to you, not directly to the lender or vendor. You can use it as part of your deposit or for settlement costs.

The scheme works well if you're still in the savings phase and have time to build up contributions. If you've already got a deposit ready and you're looking to buy in the next few months, it's less useful unless you've been contributing for a while.

Identifying the Right Loan Structure for Your Situation

If you're buying a home to live in, a standard principal and interest loan is usually the most suitable structure. Your repayments reduce the loan balance over time, which builds equity and puts you in a stronger position if you want to refinance or access equity later. An interest-only loan keeps repayments lower for a set period, typically one to five years, but the loan balance doesn't reduce during that period. Interest-only structures are more common for investment properties, though they can be useful in specific circumstances where cash flow is tight.

If you're planning to use the property as a long-term base, paying down the principal gives you more security. If your income is variable or uncertain because you've recently changed jobs or reduced your hours following separation, you might want the flexibility of a loan that allows extra repayments without penalty. Most variable loans allow this. Fixed loans typically limit how much extra you can pay without incurring break costs.

A loan with an offset account can reduce the interest you pay without formally making extra repayments. Your savings sit in the offset account, and the lender calculates interest on your loan balance minus the offset balance. If you have $20,000 in your offset account and a loan balance of $400,000, you only pay interest on $380,000. This can be particularly useful if you're holding funds for future expenses or if you want the flexibility to access your savings without redrawing from the loan.

Costs Beyond the Deposit

Buying a property involves more than the deposit. Stamp duty is usually the largest upfront cost unless you're eligible for a concession or exemption. Conveyancing or legal fees typically range from $1,200 to $2,500 depending on location and complexity. Lender application fees vary, with some lenders charging $600 to $1,000 and others waiving the fee. Building and pest inspections usually cost $400 to $800 combined. If you're buying in a strata scheme, you'll also need a strata report, which costs around $200 to $400.

If you're taking out LMI, that premium is either paid upfront or capitalised into the loan. Settlement costs also include loan establishment fees, title search fees, and registration fees. If you're moving from a rental property, you'll need to factor in removalist costs, connection fees for utilities, and potentially a few weeks of overlap where you're paying rent and a mortgage at the same time.

In our experience, buyers who've recently separated sometimes underestimate how much cash they'll need at settlement, particularly if stamp duty concessions don't apply or if they're buying outside a first home buyer scheme. It's worth mapping out every cost before you commit to a purchase price.

How Help to Buy Works and Whether It Suits Buyers After Separation

Help to Buy is an equity scheme where the Australian Government contributes up to 40% of the purchase price for a new home or up to 30% for an existing home. In return, the Government holds a proportional equity stake. You can buy with a minimum 2% deposit. The scheme has income limits: $100,000 for individuals and $160,000 for joint applicants or single parents. Property price caps apply and vary by location. You can check the applicable cap using the postcode search tool at firsthomebuyers.gov.au.

The scheme operates in New South Wales, Victoria, Queensland, South Australia, Western Australia, the Australian Capital Territory, and the Northern Territory. Tasmania has opted out. You can't combine Help to Buy with the Australian Government 5% Deposit Scheme, but you can use it alongside state grants and stamp duty concessions where eligible.

If you're earning under the income cap and your deposit is small, Help to Buy can get you into a property sooner. The trade-off is that you share the capital gain or loss with the Government when you sell or refinance. If the property increases in value, the Government's share of the sale proceeds reflects its equity stake. If you contributed 10% and the Government contributed 30%, the Government receives 30% of the sale proceeds or valuation at the time you buy out its share.

For buyers who've recently separated and are rebuilding their financial position, the income cap can be a barrier. If you're earning above $100,000 as an individual, you're not eligible. If your income sits below that threshold and you meet the other criteria, the scheme can be a practical way to buy your first home after separation without waiting years to save a larger deposit.

What Happens If Your Finances Are Still Uncertain

If you're waiting on a property settlement or your income is still being finalised, most lenders won't proceed with a full application until your situation is clearer. Some lenders will give you an indicative borrowing capacity based on your expected income and settlement outcome, but they won't issue formal pre-approval until the settlement is complete and your financial position is confirmed.

If you're self-employed or working reduced hours, lenders typically want to see at least three to six months of consistent income before they'll assess your application. If your income has dropped recently due to a change in work arrangements, that can affect your borrowing capacity, particularly if the lender views the lower income as your new ongoing position rather than a temporary adjustment.

In cases where a buyer has recently exited a property settlement, received a lump sum, and is now looking to purchase, the lender will want to see evidence of where the funds came from and confirmation that no portion of those funds is subject to further claims. A copy of your binding financial agreement or consent orders can satisfy that requirement.

Call one of our team or book an appointment at a time that works for you. We'll walk through your situation, explain what's possible, and help you put together an application that reflects where you are right now, not where you were before the separation.

Frequently Asked Questions