Proving genuine savings for your home loan deposit

Saving a home loan deposit can be challenging enough.     Then, lenders often will put another hurdle in your way by asking for proof of ‘genuine savings’. Here’s all you need to know about clearing that obstacle.

Lenders use the term ‘genuine savings’ to describe any funds you’ve saved over a period of time.

Basically, it’s their way of confirming that you’re in this for the long haul – that you’re committed to being financially responsible with your money.

Usually Lenders require you to demonstrate that you have 5% genuine savings when you are borrowing more than 80% of the property valuation.

What many home buyers don’t realise though is that there are several different ways you can verify that your savings are genuine.

Here are some types of savings lenders may consider genuine savings

– Regular deposits into a savings account over 6 months
– Term deposit savings accounts held for at least 3 months
– Shares or managed funds held for at least 3 months
– Rental history evidenced by tenant ledger for the past 6 months
– Salary sacrificing through the First Home Super Saver scheme
– Additional repayments into a car loan or personal loan
– Deposit paid to a real estate agent, builder or developer that was originally in your savings account prior to being paid (i.e. not borrowed from somewhere else)

Keep in mind that different lenders will have different policies around what they will and won’t accept as genuine savings.

What doesn’t count as genuine savings?

Here are some examples of funds that won’t count as genuine savings with the banks:

– Gift from parents or family
– First Home Owner’s Grant (FHOG)
– Borrowed funds (for example money taken from a personal loan)
– Selling assets (for example selling a car or furniture to raise cash)
– Tax refund
– Inheritance

A few final pointers

Keep in mind that some banks may consider using the FHOG towards your overall deposit amount in some circumstances.

Likewise, there are situations where a gift from a family member could be large enough to avoid the need to prove genuine savings at all.

The key to improving your chances of getting your home loan approved is to structure your genuine savings history so that it appeals to the right lender.

There’s never been a better time to buy property so let us help you get into your home sooner.    Just talk to us.


Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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