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How much genuine savings do I require?

Posted: Thu Nov 13, 2014 12:33 pm
by paulawalker
Hey guys,

I and my wife are trying to buy a home. It’s our first time applying for a home loan. Basically we would like to purchase a house worth $550,000. I’m currently working as a finance assistant for a company and my wife is a gradschool teacher. But we don’t know how to calculate our genuine savings. Can anyone help us?

Re: How much genuine savings do I require?

Posted: Thu Nov 13, 2014 1:13 pm
by Otto Dargan
Hi and welcome to the forums paulawalker.

Calculating your genuine savings can be very complicated. You can, however, use our Genuine Savings Calculator to estimate how much genuine savings you have and to determine if you are eligible for a loan.

With the help of our calculator, you can figure out how the lenders will view your deposit. You can also get an idea of whether you will meet their genuine savings requirements.

Since you are a first home buyer you may be able to apply for benefits offered by the government, such as grants and stamp duty exemptions. You can use our First Home Grant Calculator to find out if you are eligible for any of these benefits.

Cheers,
Otto

Re: How much genuine savings do I require?

Posted: Thu Nov 13, 2014 1:48 pm
by paulawalker
Thanks Otto.

Calculating the genuine savings really is very complicated and the calculator is awesome! I just have one more question for you now. What kind of genuine savings requirements will our lenders have? Can I borrow for a home even without a deposit?

I hope to hear from you soon.

Re: How much genuine savings do I require?

Posted: Thu Nov 13, 2014 3:05 pm
by Otto Dargan
Hi paulawalker,

Lender may have their own genuine savings requirements which determine how much you can borrow. You may be offered the following types of loan depending on your genuine savings:
  • 80% of the property value: No genuine savings required.
  • 85% of the property price: Most lenders do not require genuine savings.
  • 90% of the property price: Most lenders will require genuine savings.
  • 95% of the property price: Almost every lender will require genuine savings.
  • 100% of the property price: A few lenders offer guarantor loans for 100% of the property price without genuine savings.
  • No genuine savings: You can access several lenders who do not require genuine savings with help from specialised mortgage brokers.
It is very difficult to understand what genuine savings really is. However, the following may be considered to be genuine savings if they add up to over 5% of the purchase price:
  • Savings held or accumulated for over three months.
  • Term deposit held for three months.
  • Shares or managed funds held for three months.
  • Equity in real estate.
  • Some exceptions may apply if you’ve been renting for the last three months.
A couple of banks may request your saving history for the last six months instead of three months.

If you would like to know more about genuine savings then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

Cheers,
Otto

Re: How much genuine savings do I require?

Posted: Thu Nov 13, 2014 4:29 pm
by paulawalker
You’ve helped me a great deal mate!

Thank you for being so informative again, Otto. I’ve got a better idea of genuine savings now. I’ll contact you if I have any further enquiries regarding home loans.

G’day!

Re: How much genuine savings do I require?

Posted: Sun Dec 14, 2014 2:28 pm
by gleeson
Hello everyone,

I’m trying to decide if I should get a loan so that I can buy a new house. The bank wants to know how much genuine savings I have. I live in an apartment that I rented since half a year ago. Would it be considered as genuine savings? And how much genuine savings must I have? Help.

Re: How much genuine savings do I require?

Posted: Mon Dec 15, 2014 10:22 am
by Otto Dargan
Hi gleeson,

In the event that you are renting and meet a few additional conditions, some lenders may consider the rent you have been paying for the past twelve months as your genuine savings. It does not, however, mean that you don’t require a deposit. What it means is that you have met the genuine savings requirement and now your deposit can come from any other source.

If you've been renting for only three months, then in rare cases, lenders may consider additional deposit sources such as inheritance and bonuses as genuine savings. The following are normally not considered genuine savings. Your deposit may, however, come from these sources if you have been renting:
  • Gifts
  • Inheritance
  • Savings plans
  • Tax refunds
  • Lump sum deposits
  • Bonuses
  • Selling your car or other assets
  • First Home Owner Grant (FHOG)
  • Funds held in a business account
  • Any borrowed funds
  • Developer’s or builder’s rebates/incentives
Lenders may ask for a minimum 5% deposit for a home buyer and 10% deposit for an investor. If you have any further enquiries then you can contact us directly.

Cheers,
Otto

Re: How much genuine savings do I require?

Posted: Mon Dec 15, 2014 10:57 am
by gleeson
Hey, Otto!

Thanks for clarifying everything for me, mate. I’m really glad I joined the forum! I’ll send you a personal message if I need to contact you once I apply for the loan.