Genuine Savings Explained

Genuine Savings Explained

When applying for a home loan, one of the key criteria a lender will look for is a history of “Genuine Savings.” These are funds that you have gradually saved on your own, proving to the lender that you have the self-discipline to save a certain amount over time. This helps them assess your ability to make monthly loan repayments.

What Are Genuine Savings?

Typically, lenders want to see proof of at least 5% of the purchase price in genuine savings. However, each lender has slightly different definitions and requirements. Genuine savings, although substantial, may only account for a portion of your deposit.

What Do Lenders Consider as “Genuine Savings”?

• At least 3 months of accumulated savings
• A term deposit held for at least 3 months
• Shares or managed funds held for at least 3 months

Some lenders will also consider rent you have been paying over time (preferably 6-12 months) as part of genuine savings. Speak with your mortgage broker about this.

What is Not Considered “Genuine Savings”?

• First Home Owners Grant
• Inheritance
• Gifts
• Tax refunds
• Loaned money
• Money from the sale of items like a car

Different lenders have different rules on genuine savings, and most will require some proof.

How Much Genuine Savings Do You Need?

Typically, you will need a minimum of 5% of the purchase price in genuine savings. For example, on a $600,000 home, you would need $30,000 in genuine savings. You can make up the rest of the deposit from other sources.

The Best Strategy

The best strategy is to speak with your mortgage broker. They can advise and recommend the best lender suited to your individual situation.

Welcome Home

At JKL, we’re here to help you navigate the home loan process. Our experienced team will guide you through understanding and proving genuine savings, ensuring you’re well-prepared to secure your dream home.

Experience our JKL real estate family. We’ll put the welcome mat out for you!