Genuine Savings

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).  

How Much Genuine Savings do You Need?

Typically you will be asked for a minimum of 5% of the purchase price. (On a $600,000 home you would need $30,000 in genuine savings).  Then you can make up the rest of the deposit from other sources.  

The best strategy is to speak with your Mortgage Broker.  They will be able to advise and recommend the best lender suited to your individual situation.