Genuine Savings are savings considered as deposit held in your bank account or in other asset classes over a 3 month period and can be proven by way of bank statements or legal documents.
Genuine Savings include:
* Cash savings
* Term deposit
* Shares,
* Real estate assets / equity extracted from real estate assets
Non Genuine Savings include:
* Bonus income
* Commission income
* Gifts from family
* Inheritance
* Tax refunds,
* First home owners grant
* Funds in a business account
Most banks like to see 3 months’ worth of savings in your account to consider the savings as genuine for you to qualify for the home loan. This is to ensure that you are seen as a responsible saver and hence credit worthy. This is important in particular if you are borrowing more than 80% of the value of the property.
There are lenders who are okay for genuine savings to not be proven if you have a minimum 10% deposit available. Yet others, who will consider the rent you are paying currently to be considered as genuine savings, whilst you may only have saved up less than 10% deposit of the property.
If you don’t have a deposit and have parents providing guarantee for your new purchase, you can in most instances borrow 100% of the value of the property and an additional 5% for borrowing costs such as stamp duty. In this instance you don’t need to show genuine savings.
Every lender has different policies regarding what is considered genuine savings and non-genuine savings and your job and savings situation will determine the lender of choice.
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