Can I get a Home Loan without Genuine Savings?

The majority of lenders 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 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 prime assist loans that 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 Home Loans more expensive?

No, there is no difference in loan and LMI pricing with any lender 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 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 will charge a slightly higher Lenders Mortgage Insurance (LMI) premium or risk fee if you cannot prove it.

Can I get a Home Loan without Genuine Savings?

Recently, some non conforming lenders have begun to offer 95% near prime 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 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 even with a bad credit file.