Trying to get out of the rental rate race and into the property market can be really tough when you need to save a 5% deposit just to qualify for a home loan.
By choosing a lender that accepts rent as genuine savings, you can prove your capacity as a borrower instead of with your own regular savings.
Does Rent Count As Genuine Savings?Rent can count as genuine savings for certain lenders if you provide evidence of timely and full payments for at least three months or more. However, rent history alone is not enough. You will still need a deposit of at least 5% of the property value to use your rental history as genuine savings.
Will My Rent Be Accepted As Genuine Savings?Use the genuine savings calculator below to find out if your rent will be accepted as genuine savings.
Check if you meet the requirements for Genuine Savings
Home Loan With Rental HistoryTo be clear, you still need a deposit; however, if you have a solid rental history, some lenders will take this as proof that you have the ability to make regular payments, just like making regular deposits into a bank account.
What If I’m Renting Privately?
Almost all lenders require you to have been renting via a licensed real-estate agent but there is an exception to this requirement.
If you’ve been renting for more than six months, have a formal, legally binding tenancy agreement in place and can prove your rental payments with bank statements, we can help you get approved.
Call us on 1300 889 743 or fill in our free online assessment form today.
What If I’m Renting With Other Tenants?
The lease should be in your name alone or both you and your partner. You may still qualify if you are renting with other people, as long as you can prove a track record of prompt rental payments with your bank account statements and your name is listed on the tenancy agreement.
How Do I Qualify?
Rental Ledger From Your Real-Estate Agent
To qualify for rent as genuine savings, you need to show a rental ledger from a licensed real-estate agent that shows you’ve been making your rental repayments in full and on time for at least three months.
You can find a rent ledger or rental reference letter template on our website which you can provide to your property manager to complete.
A 5% deposit
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 also need to 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 the funds will be received.
- Sale of a non-real estate asset: This can include the sale of 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 Owner 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 lenders.
Strong financial position
That means your credit file should be clear of defaults, you need stable employment, and any unsecured debt such as credit cards or personal loans should be minimal.
Does Rent Need To Match The Proposed Mortgage Repayments?
Not necessarily. Although there isn’t a specific policy around this, some lenders may require that the current amount that you’re paying in rent is somewhat “comparable” to your fortnightly or monthly mortgage repayments.
This has more to do with your “capacity” or ability to afford the mortgage and banks may place more scrutiny on this if your application is tight in other areas such as your income or employment status.
Again, this isn’t a 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.
Are There Other Non-Genuine Savings Solutions?
Whether you’re currently renting or not, you can avoid the genuine savings requirement by asking your parents to provide you with a gift or by asking them to act as a guarantor on your home loan.
With a guarantor, you not only avoid the genuine savings requirement but:
- You don’t need a deposit.
- You can borrow up to 100% plus the costs of completing the purchase including solicitors fees and stamp duty.
- You can avoid LMI which can save you thousands of dollars upfront.
- You can get the same interest rates as if you were applying with a 5% deposit.
Do You Need A Rent As Genuine Savings Home Loan? We Can Help!
Our mortgage brokers specialise in non-genuine savings no-deposit home loans!
Discover if you qualify for a rent as genuine savings home loan by calling 1300 889 743 or by filling out our online enquiry form today.