Can I use rent as genuine savings?

Any general questions you might have in regards to loans and finance.
Caleb
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Joined: Fri Feb 01, 2019 1:32 pm

Can I use rent as genuine savings?

Postby Caleb » Fri Feb 01, 2019 1:34 pm

Hi, I’m looking to buy my first home after renting for the last five years at $500 a week. Can I use paid rent as genuine savings for a home loan?

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Otto Dargan
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Re: Can I use rent as genuine savings?

Postby Otto Dargan » Fri Feb 01, 2019 3:18 pm

Hello Caleb. Welcome to the forums.

Yes, you can. By choosing the right lender that accepts rent as genuine savings, you can prove your capacity as a borrower instead of with your own regular savings.

Please note that you still need a deposit but it can come from other sources other than genuine savings such as:

  • Gifted deposit from your parents: The gift must be in your account along with a signed gift letter from your parents explaining that the gift is non-refundable.
  • Bonus/dividend/commission income: You will need to provide payslips and bank statements showing the income.
  • Inheritance: A signed letter from the executor confirming the amount and date the funds will be received.
  • Sale of a non-real estate asset: This can include the sale of a car, collector items, furniture, artwork or other items. You’ll just need to provide evidence of the sale.
  • Tax refund: All you need is a copy of your Notice of Assessment (NoA) showing the tax refund.
  • First Home Owners Grant (FHOG): As long as you qualify for FHOG in your state, the banks will accept this as part of your deposit.

    Personal Loan: This is a policy exemption available with only select lenders.

Speak with our mortgage brokers who specialise in non-genuine savings directly by calling us on 1300 889 743 or fill in our free online assessment form.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Karl
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Joined: Thu Jan 31, 2019 5:53 pm

Re: Can I use rent as genuine savings?

Postby Karl » Fri Feb 01, 2019 4:23 pm

Cool. I’m currently renting with my fiance and both our names are on the lease. Is that going to be a problem?

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Otto Dargan
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Re: Can I use rent as genuine savings?

Postby Otto Dargan » Fri Feb 01, 2019 5:58 pm

Hi Caleb,

That is fine as long as your name is listed on the tenancy agreement. When you’re renting with another person, you can still qualify if you can prove a track record of prompt rental payments with a rental ledger and bank statements showing regular deductions for your rent over a period of 12 months.

Luckily, some lenders can consider rent as genuine savings with as little as 3-6 months history.

Golden tip: The rental ledger must be from a licensed real estate agent.

You can find a rental ledger or rental reference letter template on our website which you can provide to your property manager or landlord to complete.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Caleb
Posts: 2
Joined: Fri Feb 01, 2019 1:32 pm

Re: Can I use rent as genuine savings?

Postby Caleb » Fri Feb 01, 2019 11:18 pm

That’s awesome. So, how much can I actually borrow?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Can I use rent as genuine savings?

Postby Otto Dargan » Sat Feb 02, 2019 1:43 am

Hi Caleb,

Your actual borrowing power will be determined by how long you’ve been renting for:

  • 12 months rental history: You can borrow up to 97% of the property value which means 95% plus the cost of Lenders Mortgage Insurance (LMI).
  • 3-6 months rental history: You can borrow up to 95% as an exception to policy.

Speak with one of our mortgage brokers directly by calling us on 1300 889 743 or fill in our free assessment form.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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