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Can I use rent to qualify as genuine savings?


Yes, in some cases.  Here are some examples below:

Example 1.

Customer wishes to purchase a property for $500,000, they require $25,000 (5%) as funds to complete the sale. They have been renting for 12 months, at $300pw ($15,600 per year). The customers’ parents have offered $25,000 as a gift to assist with the purchase. How does this work?

Non Genuine Savings Conditions Satisfied by rental? Yes

How? The 12 months of rental history satisfied the conditions for genuine savings. The amount of the rental is not relevant, we are simply assessing behaviour that the customer can make regular contractual payments.
Funds to complete: As the Non Genuine Savings conditions are satisfied by the 12 months’ rent, funds to complete the loan can come from any source. In this case the customer received 25K as a gift from a parent to assist with the purchase, this is acceptable to use with some lenders.

Example 2.

Customer purchasing property $575,000-5% equates to $28,750. Customer has only rented for 5 months. They have $20,000 in genuine savings and have just received a bonus last week of $15,000.

Non Genuine Savings Conditions satisfied by rental? No
Why? The 5 months of rental history aren’t enough to satisfy the conditions for genuine savings.

Fund to Complete: As the Non Genuine Savings are not passed by rental, the funds to complete the loan need to come from source of genuine savings as defined by bank.

The customer requires $28,750 to satisfy policy and complete the loan, this can come from;
• $20,000 of savings
• As they have been renting for up to 3 months they are able to use the bonus to make up the $8,750

Example 3.
Customer purchasing property $575,000 – 5% equates to $28,750. They have been renting for 6 months ($450 pw) = $23,400. Customer has a gift of $20,000, genuine savings of $24,000 and a $5,350 from bonus.

Non Genuine Savings Conditions satisfied by rental? No

Why? The customer only has 6 months of rental history, this does not satisfy the genuine savings requirements under rental

Funds to Complete: The requirements on Non Genuine Savings are not satisfied, as there is not 12 months rental history

The funds to complete must come from forms of genuine savings. As the customer has 6 months of rental they can use tier 1 and tier 2 sources. In this situation the customer has;
• $20,000 gift – THIS IS NOT ACCEPTABLE 
• $24,000 in savings – acceptable
• As they have been renting or up to 3 months they are able to use the $5,350 bonus

For more examples or any questions, please contact us on 1300 734 410 


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