What are genuine savings?

Genuine savings is a term used to describe funds that borrowers have saved gradually by themselves.

When assessing a mortgage application, a lender will want to see that you have regularly saved money over time in order to evaluate whether you have the capacity to make your monthly repayments.

Every lender has its own definition and requirements for genuine savings, which will depend on the amount that you borrow, and some may not even require it at all.

Considered genuine savings.

As a general rule, lenders will accept as genuine savings any funds that amount to 5% or more of the purchase price. These include:

  • 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.
  • Contributions from the First Home Super Saver Scheme.

Not considered genuine savings.

On the flip side, the following will not be considered genuine savings:

  • Monetary gift.
  • Inheritance.
  • Tax refund.
  • Bonuses from work.
  • Profit from the sale of an asset - other than property, such as a vehicle.
  • First Home Owners Grant.
  • Borrowed funds.
  • Short-term cash savings.

The reason why they are not accepted by lenders is that they do not demonstrate good saving habits.

For more details on what you need to provide for a home loan application, speak with the team at Defence Bank. Call our Contact Centre on 1800 033 139find a mobile lender or visit your local branch for assistance.

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Important note: This information is of a general nature and is not intended to be relied on by you as advice in any particular matter. You should contact us at Defence Bank to discuss how this information may apply to your circumstances.

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