When applying for a home loan one of the important criteria a lender will ask for is a history of “Genuine Savings”.  These are funds that you have gradually saved by yourself. 

It proves to the lender that you have the self discipline over time to save a certain amount.  It helps them assess your capacity to make monthly loan repayments.

Usually lenders will be looking for proof of at least 5% of the purchase price in genuine savings.  Each lender has slightly different definitions and requirements. 

Genuine savings although need to be substantial, may only account for a portion of your deposit.

What do lenders consider as “genuine savings”

• At least 3 months of accumulated savings
• A term deposit held for at least 3 months
• Shares or managed funds held for at least three months

Some lenders will consider rent that you have been paying over time (preferably 6-12 months) as part of genuine savings.  Speak with your mortgage broker about this.

What is not “genuine savings”

• First Home Owners Grant
• Inheritance
• Gifts
• Tax Refunds
• Loaned money
• Money from the sale of something like a car

Different lenders have different rules on genuine savings (most will require some proof).