Deposits and Savings Explained.

News & Information

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. 

Let's Finance compares over 30 lenders and more than 800 financial products. For further information, or to book a free appointment, contact us now or call 9315 8888 to speak with a Home Loan Specialist. 
Category: News & Information