Non-Genuine Savings Home Loans

The majority of lenders/credit providers require you to prove that you have saved a 5% deposit before they will approve your home loan application. If, however, like many other Australians, you find yourself in a position where you have the money for a deposit, but you have not saved the money yourself and you still want a home loan. Then consider a non-genuine savings home loan.

What are Non-Genuine Savings?

If your deposit money is coming from any of the following sources, the lenders/credit providers will classify your deposit money as being non-genuine savings:

>> A Non-Refundable Gift from your Parents

>> An Inheritance from a Grandparent

>> A Large Tax Refund

>> Proceeds from the Sale of an Asset (e.g. car, motorcycle or boat)

>> Some Form of Windfall

>> Advances on Wages/Commissions from your Employer

>> First Home Owners Grant (FHOG)

>> Compensation Payouts

>> Borrowed Deposit

>> Builder/Developer Incentives

The situations listed above are very complicated. There are some lenders/credit providers who will accept these deposit sources as genuine savings. If you are currently renting your property, your rental history will be considered in few circumstances.

Are Non-Genuine Savings Loans more expensive?

No, there is no difference in loan and LMI pricing with any lender/credit provider if you are borrowing 85% of the property value or less.

If you are borrowing up to 90% of the purchase price than the majority of lenders/credit providers will have the same rates and fees for a loan as they do for people who have saved a deposit.

For loans up to 95% of the purchase price, some lenders/credit providers will charge a slightly higher Lenders Mortgage Insurance (LMI) premium if you cannot prove it.

Can I get a Home Loan without Genuine Savings?

Recently, some lenders have begun to offer 95% home loans without any proof of savings. The home loan is only available to people who are in a strong financial position. To qualify for this home loan, you must meet the following minimum requirements:

>> You must be paying your rent on time (if you are renting)

>> You must have stable employment

>> If you are self-employed, you will probably need to demonstrate your financial status over the past 2 years as a minimum

>> You must have a clean credit history (you must be free of any defaults, adverse listings and must not have too many credit enquiries)

>> You must have an excellent credit score

>> You must not have too many consumer debts such as credit cards and personal loans

>> You must be able to afford the debt comfortably.

So, don’t worry if you cannot manage to show proof of genuine savings. You can obtain non-genuine savings home loans easily by fulfilling the above mentioned requirements.

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