Posted on Jul 19, 2018

Wilson Finance Solutions

What are Genuine Savings?

When assessing a home loan application, usually a lender wants to see Genuine Savings. They are keen to establish that you have the ability to save money. Why? This helps them to evaluate whether you have the capacity to make your monthly repayments.

Every lender has its own definition and requirements for genuine savings. This will depend on the amount that you borrow, as well as the Loan to Value Ratio (LVR) of the application.

For the most part, lenders will accept as genuine savings any funds that amount to 5% or more of the purchase price. Typically you will only require Genuine Savings if the LVR is 85% or higher.

Examples of Genuine Savings:

Savings held or accumulated over at least three months
Term deposits held for at least three months
Shares or managed funds held for at least three months
Cash gift held for at least three months
Inheritance funds held for at least three months
Equity held in another property
Contributions from the First Home Super Saver Scheme
What aren’t Genuine Savings?

Monetary gifts
Tax refund
Bonuses from work
Profit from the sale of an asset other than a property, such as a vehicle
First Home Owners Grant
Borrowed funds
Short-term cash savings
Why do lenders want to see funds held for at least 3 months? So they can assess as accurately as possible that you can diligently meet the loan repayments.
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