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What counts as genuine savings in a loan application?

If you apply for a home loan, particularly if the loan is for more than 80 per cent of a property’s value, you’ll more than likely have to prove to lenders that you have a satisfactory amount of savings. This is to demonstrate your ability to funnel a portion of your income into repayments.

Whilst it can differ, in most cases lenders generally look for consistent additions to savings over a period of at least three months and preferably a year or more. This means that the following are not considered ‘genuine savings’:

  • a cash gift
  • an inheritance
  • casino or other gambling winnings
  • proceeds of the sale of a non-investment asset
  • government grants and other finance offered as incentives

Can I still get a loan without genuine savings?

For those who don’t have any genuine savings but still want to obtain finance, there are options. These include:

  • Guarantor loans – Having a guarantor on your loan may mean that no deposit is required, with the equity or asset the guarantor stakes standing in for a deposit.
  • Other significant assets such as shares, managed funds and/or equity in residential property – Depending on your chosen lender, cash isn’t the only thing accepted as genuine savings. There are even situations where the sale of a vehicle can be considered as genuine savings if proven that it was owned for three months or more.
  • A strong rental record – Some lenders will waive the requirements if a letter can be produced from a licensed real estate agent confirming that rent has been paid on time and in full for the preceding 12 months, as it highlights your ability to make repayments on time and on an ongoing basis.

Loans can be written for customers who do not have genuine savings using the aforementioned policy exceptions. It’s just a matter of looking at the customer’s full situation and knowing which lender is going to have the policies to suit. At My Property & Finance, our team has the knowledge and experience to assist you in this capacity because we keep in constant communication with lenders to know what their policy niches are.

Contact us to find out how we can assist you to get in to your own home sooner.