min. 3 months genuine savings for deposit

[Cumulonimbus]

Hi Guys and Gals,
Sorry if this has already been asked, i am struggling to find the right search words.

I would like to know the following:

If i was to put together a 5% deposit say for a private home which was $20k, what would be the bare minimum i would need to show genuinely saved? If i was to save $5k over three months and get hold of the extra $15 from a mix of credit cards and family loans would i get approved finance ($400,000) on semi decent terms?

Any help much appreciated.

 

[Hooray]

You couldn't afford the LMI, stamp duty and other costs.

 

[Corey Batt]

You need to show 5% genuine savings of the purchase price, ie on a 400k property this needs to be 20k. Most lenders also certainly don't want to see the funds coming from a credit card/personal loan etc - they will put two and two together.

Realistically you need to have sufficient funds to also cover the government charges, potentially LMI, solicitor fees to make the purchase, which inevitably means the minimum cash amount required to settle is circa 10% of the properties purchase price.

 

[Jamie M]

Agree with Corey - gen savings policies are in place for a reason.

If you're purchasing an IP then you'd prob need more than 10%

Cheers

Jamie

 

[tobe]

There are 3 kinds of deposits.

The holding deposit you give the agent, which varies from $500 to 10% of the purchase price, and is usually give in two parts.

The 'genuine savings' first home owners need to show when they get their first loan, or whenever they dont currently own property or have a mortgage.

The 'funds to complete' which is the difference between the purchase price and other costs and the amount the bank might lend.

Now, its confusing because a lot of lenders can lend up to 95% of the purchase price, so the funds to complete seems to be 5%, which some get confused with genuine savings. Treat each of the three deposit types separately.

Some lenders will let FHB's use rent paid as evidence of genuine savings, there is actually no requirement to save any money, for any time period.

The funds to complete varies depending on the type of property and the other costs involved. As has been mentioned, 8 to 10% is a good rule of thumb, but there are exceptions where the funds to complete can be less than 5%. A fhb buying land and constructing a new home is a good example, as in many states the stamp duty is discounted, and they are eligible for a first home owners grant.

 

[wylie]

If i was to put together a 5% deposit say for a private home which was $20k, what would be the bare minimum i would need to show genuinely saved? If i was to save $5k over three months and get hold of the extra $15 from a mix of credit cards and family loans would i get approved finance ($400,000) on semi decent terms?

If the family loan was given now as a "gift" and sat in your account whilst you madly saved up for three months, couldn't you and your family call it a gift, but have the intention to "pay when able".

You could still make payments when you are able to, and document it for the sake of any future arguments with siblings, but a bank would see it as a gift, and it wouldn't have to be shown as a loan to be repaid.

I'm not suggesting you commit fraud, but a small amount of say $10K "gift" that you and your parents and siblings all understand will be repaid "when able" might work.

Also, the no brainer in this scenario is that you don't do this if it will stretch you or put you in danger of thinking you can afford something that you cannot.

And, of course, your parents need to have funds available that they may gift to you and not need to have repaid for a while.

In a flat market, waiting another three months won't matter, but if prices are rising quickly, that three months could see you priced out.

Our son was able to borrow from a bank with no deposit because he had an inheritance from his grandparents in lieu of savings. It was not genuine savings, but was understood and accepted for what it was. He was not made to sit and wait a certain time before getting the loan. I'm guessing they look at each case on its merits.

 

[Bran]

Hi Guys and Gals,
Sorry if this has already been asked, i am struggling to find the right search words.

I would like to know the following:

If i was to put together a 5% deposit say for a private home which was $20k, what would be the bare minimum i would need to show genuinely saved? If i was to save $5k over three months and get hold of the extra $15 from a mix of credit cards and family loans would i get approved finance ($400,000) on semi decent terms?

Any help much appreciated.

Off topic perhaps, but is this even a good idea??

Only saving 5k in 3 months, and a cash advance on a credit card...