Bulk Deposit as Genuine Savings
A bulk deposit into one’s savings account can now be used as a form of genuine savings depending on where the money came from. In essence, genuine savings is proven money saved over a minimum period of 3 consecutive months. In the past, putting in a bulk deposit into one’s savings account the day before applying for a loan was considered non genuine savings. This is still true to an extent; however, if the deposit comes from certain sources the need for genuine savings over a 3 month period is overcome.
Is rental payment history used as part of the genuine savings?
Satisfactory rental history over a minimum period of 3 months is an acceptable part of genuine savings where a borrower cannot demonstrate 3 months savings pattern. This is different from the 12 months rental history required by another policy known as rental history as genuine savings for a home loan. The difference in these 2 policies comes from the eventual source of the deposit being used as genuine savings. The bulk deposit policy only accepts certain sources of deposit as listed below, and therefore requires only 3 months of rental history. The rental history as genuine savings for a home loan requires 12 months of continuous rental history in the same premises, however the deposit source can come from anywhere like a gift or a personal loan.
What are the bulk sources of deposit acceptable to achieve genuine savings in less than 3 months?
There are several types of bulk source deposits acceptable to achieve genuine savings in less than 3 months. These include:
- Bonus payments
- Dividend payment
- Commission payment
- Non real estate asset sale
- Tax refunds
Are there different LVR parameters for different deposit source?
There are different LVR’s for different sources of bulk deposit. The breakdown of different sources is as follows:
- Bonus Payment 95%LVR
- Dividend Payment 95%LVR
- Commission Payment 95%LVR
- Inheritance 90%LVR
- Non Real estate Sale 90%LVR
- Tax refund 95%LVR
Does the amount of rent being paid need to be a minimum amount for deposit?
The amount of rent being paid is not relevant to the financial institution. The rent does not need to equate to 5% of the loan amount. The lending institution only uses the rental history to provide evidence that the borrower can make regular payments on time every time when they fall due.
What is the maximum loan amount permissible using bulk deposit as genuine savings?
The maximum loan amount permissible using bulk deposit as genuine savings is $1,900,000 or an LVR of 95% for a $2,000,000 property. The loan also needs to be principle and interest for an LVR loan of 95%, and can be interest only for LVR of 90%.
What documentation is required for a bulk deposit genuine savings loan?
The documentation required for a bulk deposit genuine savings loan is very similar to a normal loan. These are to include the following documentation:
- Proof of income like payslips and/or tax returns
- Real estate agents letter confirming length, and conduct of rent
- Evidence of where the bulk deposit has come from. This can include confirmation of a tax refund, inheritance, or sale of non real estate asset, commission payment, dividend payment, or bonus payment
- 100 points of ID
At Mortgage Providers we are familiar with genuine and no genuine saving policies with all lending institutions. With this knowledge we are able to help determine which lenders will approve a loan based on particular savings patterns. The savings patterns could have bulk deposit from particular sources which can be argued to prove a borrowers right to be accepted as having genuine savings.