What Counts as Genuine Savings in a Loan Application?

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If you apply for a home loan, particularly if the loan is for more than 80% of a property’s value, you’ll more than likely have to prove to lenders that you have a satisfactory amount of savings. This is to demonstrate your ability to funnel a portion of your income into repayments.

Although it can differ, in most cases lenders generally look for consistent additions to savings over a period of at least three months and preferably a year or more. This means that the following are not considered genuine savings:

A cash gift

An inheritance

Casino/other gambling winnings

Proceeds of the sale of a non-investment asset

Government grants and other finance offered as incentives

Can I still get a loan without genuine savings?

For those who don’t have any genuine savings but still want to obtain finance, there are options. These include:

Family guarantee – Having a guarantor on your loan may mean that no deposit is required, with the equity or asset the guarantor stakes standing in for a deposit.  Learn more about Family Pledge here.

10% deposit– There are a few lenders who will lend up to 90% of the value of the property if client has the 10% savings deposit even if this is not genuinely saved.

Rental history in lieu of genuine savings – Some lenders will waive the requirements if a letter can be produced from a licensed real estate agent confirming that rent has been paid on time and in full for the preceding 12 months, as it highlights your ability to make repayments on time and on an ongoing basis. Learn more about Non-Genuine Savings with Rental History.

 

“ We regularly write loans for customers who do not have genuine savings using the aforementioned policy exceptions. “It’s just a matter of looking at our client's full situation and knowing which lender is going to have the policies to suit what you’re trying to achieve. This knowledge can only be achieved through experience and keeping in constant communication with lenders to know what their policy niches are.”

Originally published November 5, 2018 8:00:00 AM, updated November 20 2018

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