Lenders Insistence on Home Loan Deposits

Due to the global financial crisis, many loan providers have tightened their requirements and lending criteria on mortgage loans. So prior to applying for a home loan, it is important to conduct a research and understand the pros and cons of a home loan. Read on for some helpful information that can help you make a well-informed decision.Loan Providers

Loan providers have removed the accessibility of having 100% loans. This means that borrowers can no longer get the full amount of the purchase price. As an alternative, borrowers must prove to lenders that they have at least 5% of the home loan deposit came from their genuine savings.

Genuine Savings

Genuine savings are funds, which have accumulated over a time period. Most loan providers would require borrowers to have at least three months of financial savings in the bank to get approval for their home loan.

Having regular savings prior to purchasing a property is a good way to start since it can help you build a consistent savings structure and be ready for your long-term mortgage repayments.

What is included in the genuine savings?

Loan providers will ask any borrower to include a proof of savings through bank statements, regardless of whether the funds are from your daily bank transaction account, savings account, or time deposit. Mounting up with your piggy bank is merely not a good option, as lenders will not credit such type of savings.

Depending on the loan provider, a portfolio of shares or even any kind of collateral you have from other properties might be counted to your genuine savings provided that you have owned or operated these investments for at least three months.

Apart from that, funds coming from your First Home Saver account could also be counted to your genuine savings. This type of savings account is an incentive from the federal government to help Australians in property ownership.

What doesn’t count as genuine savings?

Here are some of the things that cannot be counted as part of your genuine savings:

  • Funds coming from parents or relatives
  • The First Home Owner Boost
  • Rebates from builders or sellers
  • Profits from selling assets
  • Money coming from a personal loan

So, if you are a first-time homebuyer, be sure to attain no less than 5% of the probable purchase cost saved in your mortgage deposit as well as have at least three months on record of your savings to back up your expenses as soon as you start searching for a property. Don’t hesitate to ask the advice about home loans from mortgage brokers in Rockingham.