Lenders assess borrowers creditworthiness, character and conduct. They will base this on your credit record and your financial history. Lenders prefer borrowers who can show savings. They typically want to see that you have genuine savings of at least 5% of the purchase price.
Genuine savings means that the lenders want to see that you have planned and saved this money for a deposit and that you are a good borrower. It demonstrates to the lender that you have the ability to establish regular savings.
Typically, any money you have accumulated over the period in your bank account is genuine savings. Eligible funds under FHSS, proceeds from sale of shares or other investment is considered genuine savings. If you already own a property and have equity build up, that equity is also classified as genuine savings and can be used as a deposit to buy another property.
But let’s say if you have sold a car or any other such asset, the proceeds are typically not considered as genuine savings. Unsecured personal loan borrowed funds wont be counted as genuine savings. Gifts on the other hand can be considered if it has been in your bank account for at least three months.
If a borrower is not able to show genuine savings, there are still lender options available who provide loan without genuine savings requirement. We suggest you get in touch with an expert mortgage broker at Snap Financial Solutions as we have a vast lender panel to choose a right loan product for you.
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