Why I need genuine savings?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Why I need genuine savings?

Post by Otto Dargan »

Hi law. Welcome to the forum.

Nowadays most of the lenders require borrowers to have genuine savings while applying for a loan. In general, lenders require borrowers to have 5% of the purchase price in genuine savings for a home loan, and 10% for an investment loan.

Lenders have their own genuine savings policy, so you cannot tell for sure what is considered to be genuine savings. However, the following are usually considered as your genuine savings:
  • Savings accumulated over the past three months
  • Term deposits held over three months
  • Shares or managed funds held over three months
  • Equity in real estate
  • If you have been paying rent over the past three months.
The requirement for genuine savings also depends on the Loan to Value ratio (LVR). If the LVR is:
  • up to 80%, then genuine savings is not required.
  • less than 85%, then most lenders do not require genuine savings.
  • less than 90%, then you need genuine savings in case of most lenders.
  • between 90% and 95%, then almost all lenders require genuine savings.
  • 100% or even more, then you may be able to get a guarantor loan without genuine savings.
You can use the Genuine Savings Calculator to estimate your total genuine savings requirement based on different lenders.

Please call us on 1300 889 743 and one of our specialist mortgage brokers will let you know if you qualify for a loan.

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: Why I need genuine savings?

Post by Otto Dargan »

Hi law,

The rental payments may be considered in place of your genuine savings by some lenders. However, you have to meet certain conditions for that such as:
  • You must have been renting for at least three months.
  • Your rental payments should cover at least 50% of your future loan repayments.
  • You must be paying your rent and other bills on time.
  • You must be using a licensed real estate agent for your rent.
  • You will need to make a 5% deposit on your loan, but it can come through a gift, inheritance, shares, cash, bonus payments or equity in another property.
There may be other options available if you do not have genuine savings.

Please call us on 1300 889 743 or enquire online to speak to a specialist mortgage broker who can find you a loan without the need to show genuine savings.

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

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