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Does my mortgage repayment have to match my rent?

Posted: Mon Aug 26, 2019 7:24 pm
by Audry
I am 30 years old and have a steady job earning $90,000 annually and I have no debt. I need to move out soon from my apartment as the tenancy agreement is over.

Does my mortgage repayment have to match my rent?

Re: Does my mortgage repayment have to match my rent?

Posted: Mon Aug 26, 2019 7:38 pm
by Otto Dargan
Hi Audry,

Thank you for reaching out to us and welcome to the forum.

There is no strict policy or hard and fast rule that your rent should match the repayment amount. Banks or lenders look more into your ability to afford and repay the home loan - so they look more into your income, employment status, credit history etc.

However, some lenders do require that the current rent amount will be similar to your fortnightly or monthly mortgage repayments.

This isn’t strict policy so it’s best to speak to one of our mortgage brokers so we can properly assess your overall financial situation and select the lender that’s right for you.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan.

Cheers,

Re: Does my mortgage repayment have to match my rent?

Posted: Mon Aug 26, 2019 7:48 pm
by Audry
I will be calling soon. Just wondering if rent is considered genuine savings.

Re: Does my mortgage repayment have to match my rent?

Posted: Mon Aug 26, 2019 8:04 pm
by Otto Dargan
There are some lenders who will accept your rental payment history as genuine savings.

You still need a deposit but if you have a solid rental history, some lenders will take this as proof that you have the ability to to make the repayments on a regular basis.

In order to qualify for a ‘rent as genuine savings mortgage’, you need a rental ledger from a licenced real estate agent that shows you’ve been making your rental repayments in full and on time for at least 12, 6 or even 3 months.

How much you can borrow will vary depending on how long you’ve been renting for:
  • If you show 12 months of rental history, you can borrow up to 97% loan to value ratio LVR inclusive of Lenders Mortgage Insurance.
  • If you show 6 months of rental history, you can borrow up to 95% LVR.
  • If you show 3 months of rental history, with a policy exception, you can borrow over 95% LVR.
Please note that loans over 80% LVR have stricter lending criteria.

Cheers,

Re: Does my mortgage repayment have to match my rent?

Posted: Mon Aug 26, 2019 8:08 pm
by Audry
You mentioned I still need a deposit. How much deposit do I need to show? What are the accepted sources of deposit?

Re: Does my mortgage repayment have to match my rent?

Posted: Mon Aug 26, 2019 8:30 pm
by Otto Dargan
Hi Audry,

You will need a deposit of at least 5% of the purchase price. As long as you can show that you’ve been paying rent on time and in full for a minimum of 3 months, some lenders will accept the following as part of your deposit:
  • Gifted deposit from your parents: The gift needs to be in your account and you need to also provide a signed gift letter from parents explaining that the gift is non-refundable.
  • Bonus/dividend/commission income: All you need to provide is a payslip and bank statement evidencing the payment/s.
  • Inheritance: Provide a letter from the Executor confirming the amount and date that the funds will be received.
  • Sale of a non-real estate asset: This can include the sale of a car, furniture, artwork or other items. You just need to provide evidence confirming the details of the asset that you sold.
  • Tax Refund: Simply provide a copy of your Notice of Assessment showing the tax refund amount.
  • First Home Owners Grant (FHOG): As long as you qualify for FHOG in your state, banks will accept this as part of your deposit.
  • Personal loan: This is a policy exception with some of our lenders for high-income earners
Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan.

Cheers,