For many people on the Gold and Tweed Coast looking at purchasing property, whether they be First Home Owners or market veterans, proof of genuine savings seems to be the major hurdle to be overcome when it comes to applying for finance.
In light of economical events that have occured over the last decade, some banks and their policies have become a lot stricter. One of the big policy changes in recent years - and one that is forever changing - is that of the requirements for genuine savings.
In banking terms, genuine savings is refered to as being "a consistent saving of funds over a period of three or more months, held within the same account." This means that inheritance, gifts from family members and recent sales of assets are not considered to be "genuine" unless they have been held for three or more months. When purchasing property it should also be noted as a rule of thumb that there is usually to be a minimum of a 5% deposit saved genuinely.
'Why is that the case?' I hear you asking. Well, there is some method behind banking madness. The first explanation for such policies is that it is less risk for the banks to take on. They want some degree of certainty that you as a borrower, are responsible with your finances and are not simply working pay cheque to pay cheque and that you have the capacity to save. Secondly, banks want to see that you, the customer, are willing to take on a level of responsibility, in that you are going to contribute some of your hard earned money towards the purchase transaction. This can often be referred to as 'hurt money'.
Whilst to many, the prospect of 'genuinely' saving at least a 5% deposit can seem quite daunting, you should not be concered. As Mortgage Choice Brokers, we have access to 27 different lenders, some of whom will take in to consideration other alternatives to saving genuinely.
If you are unsure whether your savings are considered genuine or not, please do not hesitate to give us a call or book an appointment, we would be more than happy to have a chat and perhaps eleviate any fears you may have around this area.
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