Banks and lenders will not lend 100% of a loan. Meaning that as a minimum you are usually required to prove that at least 5% 0f y0ur home deposit from genuine savings? Once your loan falls into mortgage insurance territory then genuine savings becomes a requirement.
What is genuine savings?
The majority of lenders will require that your savings have been saved up over a period of at least 3 months.
What counts towards genuine savings?
Genuine savings must be held in the borrowers name and can include any combination of the following sources:
– Funds held or accumulated in savings accounts for three months or more
– First Home Saver Account (initiative by the Australian Government)
– Equity in, or funds from sale, of residential property
– Term deposits held for three months or more
– Shares held for no less than the last three months
– Accelerated loan repayments – where savings have been sacrificed by making accelerated loan repayments over the last three months, the amount of the excess repayments, can be accepted in lieu of genuine savings.
Where funds have not been held for three months, evidence of satisfactory rental payment history may be considered to meet the genuine savings requirement. The following additional underwriting requirements apply:
– owner-occupied purchases only
– all borrowers must be first homebuyers
– funds cannot be borrowed (ie personal loans, credit cards or loans from family members)
– lump sum payments such as bonuses, tax refunds and proceeds from sale of assets, may be considered under certain circumstances
– First Home Owner Grants (FHOGs) may be accepted at the time of application to contribute to the 5%s savings/deposit requirement
– All funds required to complete the purchase transaction (deposit plus settlement disbursements minus the FHOG), must be evident at the time of application.
Must be in the name of the borrower and not be older than three months prior to the date of the loan application to the financial institution