Deposits and Genuine Savings

Not all deposits are equal in the eyes of Australian lenders.

If you are borrowing over 90% of the value of the property then the lender will be looking for evidence of 5% "genuine savings" in your deposit.  This is required to satisfy the mortgage insurers.

Genuine savings is commonly evidenced by providing the last 3 months of your savings account statements showing that you have held at least 5% of the purchase price as savings.  The lender will be looking to see that the savings have grown over this time and no big external deposits have been used to prop the savings up.  Alternatively, you can use a term deposit or shares that have been held for more than 3 months or a combination of all of these.

If you don't have genuine savings then some lenders may look at the rent you have paid over the past three months and use that in lieu of genuine savings.

In any case - the key to genuine savings is planning in advance.  If you know you need to satisfy the genuine savings requirement and you plan to apply for a loan in 3-4 months then get your savings in order as soon as possible.  Show that you have held the minimum 5% over this time and try to keep it all in one savings account to make it easier for the lender to assess.

Contact us to get help with understanding where you sit with genuine savings.

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