Can I use rental payments as genuine savings?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: Can I use rental payments as genuine savings?

Post by Otto Dargan »

Welcome to the forum rage,

You are usually required to show at least 5% of the property value in genuine savings to qualify for a home loan.
This applies specially when you are borrowing up to 80% or more of the property value. What this means is that the money which amounts to 5% of the purchase price must have been held in your savings account for a specified period, usually 3 months.

There are some lenders who may be willing to accept the weekly rent you pay as genuine savings. In addition, there are other types of genuine savings acceptable to one of our lenders such as cash from the sale of your car, an inheritance, or a bonus from work if you have been renting for at least three months.
Please note that there are certain criteria for the lenders to accept rent as genuine savings.
  • You must have a rental history of at least three months (previously 12 months).
  • Your rental repayments should be at least 50% of the proposed home loan repayments.
  • You must be paying your rent and your bills on time.
  • You must be renting via a licensed real estate agent.
  • You still need 5% as a deposit, it just doesn’t need to be saved over a three month period. It can come from a gift, inheritance, cash, shares, bonus from work, term deposit or equity in another property.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I use rental payments as genuine savings?

Post by Otto Dargan »

Although most of the lenders tend to have their own guidelines as to what is and what isn’t considered as genuine savings. The following can generally be accepted as genuine savings:
  • The money saved in your bank account over the last three months.
  • The money held in a term deposit for over three months.
  • Equity held in an existing property (accepted by only some lenders).
  • If you have received any proceeds from the sale of a property (accepted by only some lenders).
  • Shares or managed funds held for three months.
To see whether you are able to refrain from spending the money or not, some lenders may ask you to hold the funds for a total of six months instead of three months.

You can use our Genuine Savings Calculator as a guide to find out how much savings you may require for your home loan.

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

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