"genuine" savings

[D.T.]

Hi,

Say someone is using cash for a house deposit and the bank in question cares about what proportion of that deposit is 'genuine' savings as opposed to gifted, loaned from family etc...

What's stopping someone from getting a personal loan, withdrawing it all into their savings account then doing their mortgage application 3 months later? If the bank asks for 3 months worth of statements, the money has been sitting there the whole time and therefore 'genuine', no?

 

[vaughan]

They will also ask whether you have any personal loans...

 

[D.T.]

They will also ask whether you have any personal loans...

To which you can respond yes and they'll take that amount into consideration when calculating your capacity.

 

[Aaron_C]

It depends on the LVR. For any loan above 90% generally you will need to prove 'genuine savings'. So the personal loan thing will come up because they will want to see the last 3-6 months of loan statements and any large cash increases will have to be explained. Plus for these type of deals they are under very, very tight scrutiny and they may reject the deal because you have a personal loan even if you can prove your savings are 'genuine'.

edit: Genuine savings is only really a concern for first home buyers or those with insufficient equity in their current homes. For other investors/people you can use the equity in your other properties for 'genuine savings'.

 

[Rolf Latham]

can be made to be acceptable with some lenders, or use a lender that doesnt require 5 % gen

ta
rolf

 

[Marty McDonald]

If there is a credit file hit for a $20k personal loan 6 months ago and you only have say $25k in savings now it's not going to look good.

Not saying its impossible to do but they have seen it all before.

 

[Jake D]

Not that I'm planning this, but in the theme of the original question; Say a friend/relative either gifts you cash or takes a personal loan/redraw for you. You stick the cash in the bank and apply 3-6 months later.

Does this then look like "genuine savings" to the bank?

 

[Rolf Latham]

Not that I'm planning this, but in the theme of the original question; Say a friend/relative either gifts you cash or takes a personal loan/redraw for you. You stick the cash in the bank and apply 3-6 months later.

Does this then look like "genuine savings" to the bank?

pretty much .....................


ta
rolf

 

[Jamie M]

Not that I'm planning this, but in the theme of the original question; Say a friend/relative either gifts you cash or takes a personal loan/redraw for you. You stick the cash in the bank and apply 3-6 months later.

Does this then look like "genuine savings" to the bank?

Yep - the gift will usually need to be accompanied by a signed stat dec stating that it's a non repayable gift.

If you're being gifted the deposit, you don't need to wait the 3 months to show gen savings. The LVR you're after will determine your scope of lenders.

Cheers

Jamie

 

[pennyk]

it was many many moons ago, but this is ONE of the reasons that Suncorp knocked us back for our first PPOR application (alongside with a number of equally stupid reasons, which I dont think I've forgiven them for, 15 years later!! ).

I had been given $5K, probably for my 21st, which I had added to in my early 20's, until it was around $20K. Then it just sat in a term deposit for 10 or so years. When we came time to get a loan, they wouldnt class it as genuine savings, because they couldnt see how it was actually saved.

 

[D.T.]

Any of the brokers willing to share any westpac policy info on this?

(for ppor, not fhog)

 

[Aaron_C]

Why Westpac?

 

[tobe]

generally speaking the policy is to provide 3 to 6 months of savings statements showing 5% of the proposed purchase. If that looks like steps over time, with small steady increments, everythings hunky dory.

If there are large cash deposits, or if its a long term deposit product the lender or mortgage insurer may ask for the source of those funds. This obviously means you might get stuck if the source is borrowed.

there are lenders who will work off a borrowed deposit, as long as everything services (how they get away with this under NCCP Im not sure), so I suggest going with one of those lenders rather than trying to pretend your funds are something else with a lender who does have a genuine savings policy.

Westpac will accept rental payments instead of genuine savings, however you still need to show funds to complete, which could be a gift (But not borrowed)