What Is Genuine Savings?
For many Australians, saving a deposit is one of the biggest challenges when buying a property. Along the way, you may hear lenders and mortgage brokers talk about “genuine savings.”
But what exactly does it mean, and why is it important?
Understanding genuine savings can help you prepare for a home loan application and show lenders that you’re financially ready for home ownership.
What Are Genuine Savings?
Genuine savings are funds that you have personally saved over time and can demonstrate through your financial records.
Lenders use genuine savings to assess your ability to manage money, build savings consistently, and handle the financial responsibilities that come with owning a property.
In simple terms, genuine savings help prove that you can set money aside regularly rather than relying entirely on borrowed or gifted funds.
Why Do Lenders Look for Genuine Savings?
When a lender is considering a home loan application, they want to understand more than just your income.
They may also assess:
-
- Your saving habits
- Your spending behaviour
- Your ability to manage ongoing loan repayments
- Your overall financial discipline
A history of genuine savings can provide additional confidence that you’ll be able to manage mortgage repayments over the long term.
How Much Genuine Savings Is Usually Required?
Requirements vary between lenders and loan products.
Traditionally, some lenders have looked for genuine savings when borrowers have less than a 20% deposit or are borrowing a higher percentage of the property’s value.
However, lending policies differ significantly, and some lenders may accept alternative evidence of financial management.
An awesome mortgage broker like Albert Waldron can help identify lenders whose policies suit your circumstances.
Examples of Genuine Savings
Funds that are commonly accepted as genuine savings may include:
Regular Savings Contributions
Money that has been built up gradually in a savings account over several months.
For example:
- Saving $300 per week from your salary
- Setting aside part of your income into a dedicated deposit account
Check our savings calculator to set your goals
Term Deposits
Funds held in a term deposit for a period of time may be recognised as genuine savings.
Shares and Investments
Some lenders may consider investments that you’ve accumulated over time, depending on their policies.
Equity in a Property
In certain situations, equity built up in an existing property may be acceptable.
What May Not Be Considered Genuine Savings?
Each lender has different requirements, but examples that may not automatically qualify include:
Recent Gifts
Money gifted shortly before a loan application may not always be treated as genuine savings.
Personal Loans
Borrowed funds generally do not demonstrate a capacity to save and may not satisfy genuine savings requirements.
Recently Deposited Funds
Large lump-sum deposits appearing shortly before an application may require further explanation.
Lenders often want to see where the money came from and how it was accumulated.
Can Rental History Help?
Many lenders recognise that consistently paying rent requires financial discipline.
In some situations, a strong rental payment history may help demonstrate responsible financial management.
For example, if you’ve been paying rent on time for an extended period, a lender may view this positively when assessing your application.
The treatment of rental history varies from lender to lender.
How Long Do You Need to Show Genuine Savings?
Many lenders have traditionally looked for evidence of savings accumulated over at least three months.
However, policy requirements can differ depending on:
- The lender
- The size of your deposit
- The loan structure
- Whether a guarantor or gift is involved
Because lending policies regularly change, it’s important to obtain advice specific to your situation.
Tips for Building Genuine Savings
If you’re planning to buy a property in the future, consider these practical steps:
Open a Dedicated Savings Account
Keeping your deposit savings separate can make your saving history easier to track.
Automate Savings
Set up automatic transfers each payday to build consistency.
Reduce Unnecessary Spending
Small reductions in discretionary expenses can add up over time.
Keep Records
Maintain account statements and documentation showing how your savings were accumulated.
Start Early
The earlier you begin saving, the stronger your savings history may become.
Does Genuine Savings Affect First-Home Buyers?
Yes, genuine savings can be particularly relevant for first-home buyers who are building their first property deposit.
A demonstrated savings history may strengthen a loan application and potentially increase access to a wider range of lending options.
However, every borrower’s circumstances are different, and lender requirements can vary.
The Bottom Line
Genuine savings are funds that demonstrate your ability to save consistently over time. For lenders, they can provide evidence of financial responsibility and readiness for home ownership.
While genuine savings requirements vary across lenders, developing a strong savings history can place you in a better position when applying for a home loan.
If you’re unsure whether your savings meet a lender’s requirements, speaking with an Awesome Mortgage broker like Albert Waldron can help you understand your options and identify lenders that align with your circumstances.
Contact Awesome Lending Solutions for guidance on how to get your first home sooner