What does genuine saving mean?

When lenders want to know how much amount of money you’ve saved towards the purchase of your new home. As this is one-way lenders consider whether you have the potential to pay your home loan repayments every month.

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Often considered genuine savings:

Regularly-accumulated savings held over a period of time
Term deposits (held for minimum of three months)
Shares (held for minimum of three months)
Cash gift (held for minimum of three months)
Equity in a home

Not usually considered genuine savings:

Recent gifts or windfalls
Sales of other assets (other than property)
Borrowed funds (e.g. personal loans)
First homeowners’ grants
Short-term cash savings

Points to remember:

Genuine savings differ from lender to lender
Speak to your broker to determine how you may find a lender more suited to your situation
Short-term savings rarely count
You only need to prove up to a certain percentage level of genuine savings
It’s not just ‘savings’ that count, but often also shares and other funds
You can use equity instead of genuine savings

How much required in ‘Genuine Savings’?

If you are looking to buy your first home as an owner occupier, lenders will typically ask for a minimum of 5% of the property purchase price. If you are looking to buy your first home as an investor, lenders will typically ask for a minimum of 10% of the property purchase price.

Some useful tips for savings

Avoid impulse spending: Carefully consider all purchases. If you don’t need it, don’t buy it.
Create a budget: Cut needless expenses and put the money you’ve saved towards your deposit.
Plan your meals: Create a menu for the week. This will help you shop efficiently so you avoid overspending on food you don’t eat.
Sell things you don’t need: Sell old clothes, appliances and toys online or at markets.
Ask for a discount: Many companies offer discounted rates to loyal consumers. If you get a discount, place the extra money you saved into your savings.

Apply for a home loan

If you would like to find out your options, give us a call on 1300 YFA BROKER (932 276) we have access to a large panel of lenders who have varied policy on genuine savings.