What is Genuine Savings?
In short, ‘Genuine Savings’ is a term used by most banks to refer to savings you have made yourself over a period of time. This is opposed to savings acquired in a lump sum e.g. receiving a gift or a one off bonus from work.
Why do the banks care?
By evidencing that you have a track record of savings you can show the bank that you have both the willingness and the ability to make loan repayments. This speaks to your financial character in that you’re likely to continue putting aside a portion of your income each month to make your loan repayments, just as you have done in the past with your savings.
This can be contrasted with non-genuine savings where a lump sum has been received in order to contribute towards your deposit. These can come in the form of a one off bonus, a gift from your parents or even a large prize from a competition. Savings like these are still very useful for increasing your deposit and reducing your loan LVR ratio, however they do not help with evidencing a good financial character. If you’re unsure whether or not your savings would be considered genuine try asking your mortgage broker.
Here at Money Solutions, it’s our job to look at your entire financial position, including your genuine and non-genuine savings to assess exactly how much you could be borrowing. Give us a call today to find out more about how we could be helping you buy your next property.