What's considered genuine savings by the banks?

Any general questions you might have in regards to loans and finance.
Vaughn
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Joined: Thu Feb 14, 2019 12:50 pm

What's considered genuine savings by the banks?

Postby Vaughn » Thu Feb 14, 2019 12:52 pm

Hi there, we found the perfect 3-bedroom townhouse for sale close to a very good school district in the Ringwood East suburb which is currently on the market for $730,000. We’ve been renting in the city at $400 a week for the last 2 years. Recently, our 3-year fixed-term deposit just matured with a $40,000 payout, which we’re planning to use as the deposit. Apart from that, we don’t really have any other genuine savings. How do we get approved for a home loan?

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Otto Dargan
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Re: What's considered genuine savings by the banks?

Postby Otto Dargan » Thu Feb 14, 2019 5:10 pm

Hello Vaughn. Welcome to the forums.

Most banks accept the following types of savings to be genuine savings:
  • Savings held over 3 months.
  • Term deposits held for 3 months.
  • Shares or managed funds held for 3 months.
  • Equity in real estate (varies depending upon the lender).
  • If you’ve been renting for the last 3 months then some exceptions may apply.
  • Even salary sacrificing under the First Home Super Saver Scheme can be acceptable.

Lenders typically ask for a minimum of 5% of the purchase price to be from genuine savings for a home buyer and 10% of the purchase price for an investor.

Since you’ll be using a 10% deposit, it can be difficult to get approved for a home loan that is more than 90% of the value of the property.

Speak with one of our experienced mortgage brokers today to find out if you qualify.

Please give us a call on 1300 889 743 or fill in our free assessment form.

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

Vaughn
Posts: 3
Joined: Thu Feb 14, 2019 12:50 pm

Re: What's considered genuine savings by the banks?

Postby Vaughn » Thu Feb 14, 2019 6:29 pm

That’s wonderful. Now, how much will the funds to complete be?

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Otto Dargan
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Re: What's considered genuine savings by the banks?

Postby Otto Dargan » Fri Feb 15, 2019 11:25 am

Hi Vaughn,

When you buy a property, you can expect to spend up to 5% of the property on stamp duty, Lenders Mortgage Insurance (LMI), legal fees and home loan set up costs.

This doesn't include your 5% deposit!

In your case, for a $730,000 home, there may be up to $36,500 of extra costs involved in order to complete the purchase.

Please use our purchasing costs calculator to find out how much you can expect to spend completion costs.

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

Vaughn
Posts: 3
Joined: Thu Feb 14, 2019 12:50 pm

Re: What's considered genuine savings by the banks?

Postby Vaughn » Fri Feb 15, 2019 12:40 pm

That is a lot more than I expected. On top of that, how much LMI will we be paying?

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Otto Dargan
Mortgage Specialist
Posts: 7391
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: What's considered genuine savings by the banks?

Postby Otto Dargan » Fri Feb 15, 2019 2:22 pm

Hi Vaughn,

The Lenders Mortgage Insurance (LMI) premium on a $730,000 property with a $40,000 deposit can be anywhere between $28,290 to $31,500.

To find the cheapest LMI premium from our panel of lenders, please use our LMI calculator.

You could potentially save thousands of dollars by choosing the right lender.

What many borrowers don't know is that you can actually add the cost of LMI on top of your home loan.

This is known as capitalising LMI and it means you can avoid thousands of dollars upfront.

In this way, you can put those savings away to set up your house with furniture or cover other immediate expenses you might have.

Speak with one of our experienced mortgage brokers today to find out if you're in a position to qualify for a 90% home loan and capitalise the cost of mortgage insurance.

Give us a call on 1300 889 743 or fill in our free assessment form.

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


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