5% non genuine savings incl. FHOG

[Brizza]

Hi,

Just wondering if there are any products available that allow the deposit to be
- 5%
- Non genuine savings (ie. gift etc)
- Include funds from the FHOG (which is received on settlement of the property)

If there are products that suit this criteria, what extra conditions do they have besides regular lending criteria?

 

[pobrien3]

Hi Brizza

Most lenders will now allow 95% non genuine savings loans. Your 5% deposit can include FHOG and gifts. The funds just can't be borrowed. Most of the lenders that offer this will also allow you to capitalise LMI to the loan up to a 97% LVR or more in some cases.

The only extra conditions I have seen is that some of the lenders will have a higher LMI rate for non genuine savings loans.

Cheers

Patrick

 

[Qlds007]

Hi Brizza

I wouldn't go as far as pobrien in stating that "most lenders allow 95% non genuine saving loan" however there are a few that have waived that requirement.

Those Lenders that offer this option in most cases offer the same lending terms, conditions, costs and fees as they do for all of there other clients.

 

[peaches]

5% or 95%

Brizza

The big trap that most borrowers fall into is focusing on what percentage (LVR- loan valuation ratio) they bring to the deal. This misses the point.

Because lenders are only interested in what LVR they are financing. Even if you have 10% of the purchase price - lenders think in valuation or contract whichever is lower AND then you must consider LMI (mortgage insurance) stamp duty and legals ie; you can have 10% of the purchase price but may be borrowing 95% of that amount because of all the other costs/

LMI's (lenders mortgage insurers) have loosened up considerably over recent months. Most 5% genuine savings over 6 months are now 3% over 3 months. Most lenders can do 95% with no genuine savings - but that isn't the same thing as have 5% deposit.

A very important tip - stick to lenders who capitalise LMI - in other words they calculate the LMI on the loan amount - before the LMI is added. Look to ING if you are a first home buyer - CBA/Colonial have a similar deal as long as your settlement (and pain threshold) isn't tight - but this one policy difference can save you $2000 or more on a $250k deal. If you have to go to 100% or 97% plus LMI ( same thing ie: LMI is 3% ) There are many good deals (allowing for 3% LMI) - personally I think Adelaide Bank offer great service - but LMI is always an issue.

 

[Medine]

Hi Brizza,

Do you have 5% in total, or 5% plus costs?

If you have 5% in total you might need a 100% loan, and use your gift and FHOG to pay for costs (stamp duty, legals etc.).

Cheers, Medine

Comments are general only and should not be taken as specific taxation, financial, legal or investment advice.

 

[Rolf Latham]

Hiya

Id agree that almost all major lenders and LMI providers have now pretty much waived the need for gen savings in most cases.

PS AS a nsw first home buyer you wont need stamps so that would make your 5 % go pretty much all the way, since almost all major lenders now cap LMI premiums.
ta

rolf

 

[Brizza]

Thanks for your replies. It's given me a better idea of where I stand.

Medine, I have 5% + costs for legal fees.

As Rolf said, don't need to budget for stamp duty as first home buyer.