Keep on squirreling that money away and your new home will be closer than you realise.
Your savings history is important because it proves to a lender (or bank) that you will be able to repay your home loan. A deposit can consist of genuine savings or non-genuine savings, which can also include gifted money.
Lenders have different rules regarding deposit requirements. A minimum of at least 1% to 5% is usually required in order to obtain a home loan, however deposit amounts can vary between lenders.
Genuine Savings is money that you have saved, that has not been altered for a period of at least 3 months. These savings are normally regular monetary deposits rather than just a lump sum of money.
In order to prove that you can maintain a consistent savings pattern, genuine savings need to be:
- In your account
- Under your own name
- Untouched for at least 3 months, and
- Saved in regular instalments.
E.g. $150 per week /or $300 per fortnight although this amount will vary, depending on what you are able to save. You may choose to open a separate savings account with a higher interest rate so that your savings work harder for you and you're not tempted to withdraw any money from this account.
Non-Genuine Savings still need to be in your own account but these savings can include things such as:
- Your tax return
- An inheritance
- Money from the sale of an asset (e.g. car, motorbike), or
- Funds that have been given to you by a loved one.
There are other ways of proving that you are able to save, your land deposit or rental payment history can also assist. It’s best to speak with a Home Loan Specialist with regard to these items so that your individual circumstances can be assessed.
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