The significance of Genuine Savings While Availing Property Loans in Australia Sep 17, 2018 | Uncategorized Many lenders don’t require genuine savings of the borrower for lending purposes. With these lenders, the borrower can borrow almost 100% of the property-purchase price using a guarantor. However, there may be some lenders who require genuine savings to finance a certain percentage of the property value. This percentage may vary from 90% to 100% of the property value. In this context, it is important to define genuine savings. Understand that in Australia home loan deposits is not complete without genuine savings. Genuine saving is a term that is used by the lenders to define funds that are saved by the loan applicants over a period of time. In recent times Australian lenders require borrowers to save 5% of the property-purchase price in a bank account in their name. The lenders have different requirements for genuine savings based on the borrowing amount. If you are opting for a home loan then, it’s best that you either visit or find the business contact information to talk to mortgage brokers or business loan brokers and understand whether you qualify for a home loan or not. Classified as Genuine Savings Lenders have their own genuine savings policies. There is the genuine savings calculator that helps you to find out the money you need in genuine savings while applying for a home loan. The following saving types are considered to be genuine savings if their sum adds up to 5% of the property purchase price. Savings held or that which is accumulated over a period of three months. Term deposits held for a period of three months. Managed funds or shares held for a period of three months. Real estate equities (However this varies depending on the lender’s criteria). There may be some exceptions if you have been renting for the last three months. If you opt for bank loans then understand that there are banks which request six months saving history from the lenders instead of the three months of history required by other lenders. Non-genuine savings Banks and other financial institutions that lend money as home loans to borrowers want to see if the borrower has planned and saved money as this helps them understand whether the borrower qualifies to become a good borrower. The following are not included in genuine savings:- Gifts Savings plans Inheritance Tax refund Bonuses Lump sum deposits Selling your cars, other assets Funds that are held in a corporate account First Home Owners Grant (FHOG) Borrowed funds (e.g. personal loans) Developer’s or builder’s incentives/rebates However, if you are renting a property then there are numerous exceptions to the above. The qualified mortgage brokers available online are at the service of the customers and therefore as a home loan applicant you can contact these professionals and stay informed about the lender you qualify with. Your Finance Adviser is one of the leading online brokers with 12+ years of expertise and connections in this domain to help you avail the best home loan rates. Whether a Deposit paid to a Builder is Genuine Savings or Not A deposit that is paid to a real estate developer, builder or real estate agent can be considered genuine savings by lenders as long as the following criteria hold good:- The deposits should be held by the real estate developer, builder and property agents for a period that does not exceed three months. The borrower has to prove to the lender that the deposit was not borrowed. The person needs to prove that the deposit was in the borrower’s bank account prior to his paying the deposit to the lender. If you are applying for a home loan in Australia, then you can research online and apply with a lender who has a more reasonable approach. No Genuine Savings Home Loan There are certain home loans where genuine savings is not required by the lender. No genuine savings are available if the applicant for home loan chooses the right lender. No genuine savings home loan allows the borrower to borrow up to 95% of the property value. With the no genuine savings home loan, the rates of interests are the same as those of a regular loan. The borrower requires having a good asset position. The person must have an income as well as employment stability. The borrower requires a deposit. Such deposits can come from any source. If the borrower has no deposits then that person can consider availing a guarantor loan. There are other criteria that the prospective borrower might require meeting in this regard. Your Finance Advisers provides relevant information and services, and any prospective borrower can contact us to learn more about home loans, and no genuine savings home loans. We advise to engage in home loan comparison to avail the best home loan rates.
