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Can I use rent as genuine savings?

Posted: Fri Feb 01, 2019 1:34 pm
by Caleb
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?

Re: Can I use rent as genuine savings?

Posted: Fri Feb 01, 2019 3:18 pm
by Otto Dargan
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,

Re: Can I use rent as genuine savings?

Posted: Fri Feb 01, 2019 4:23 pm
by Karl
Cool. I’m currently renting with my fiance and both our names are on the lease. Is that going to be a problem?

Re: Can I use rent as genuine savings?

Posted: Fri Feb 01, 2019 5:58 pm
by Otto Dargan
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,

Re: Can I use rent as genuine savings?

Posted: Fri Feb 01, 2019 11:18 pm
by Caleb
That’s awesome. So, how much can I actually borrow?

Re: Can I use rent as genuine savings?

Posted: Sat Feb 02, 2019 1:43 am
by Otto Dargan
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.