Rental History as Genuine Savings

Did you know that rental repayment history can be used as a substitute to genuine savings? You may be asking your your self how this can help you? Well, historically most lenders have asked a respective borrower to be able to demonstrate a minimum of 5% genuine savings when looking at purchasing a property.

The 5% genuine savings is an important first step when approaching a respective lender in order to be able to get your finance approved.

• Historical rental payments made by an applicant would be an acceptable form of genuine savings where the applicant is currently renting.

• In this case there are a couple of lenders who will look at approving a loan application if the borrower was unable to provide 3 or 6 savings history.

Yes, if rental history meets the policy for genuine savings, then you will need to be able find at least 5% deposit to contribute to the loan to be able to purchase a property and secure the loan.

The deposit in this instance can come from any source, and does not need to be saved in your bank account over a 3 months period as with the usually requirement for genuine savings. These include:

The maximum LVR that a lender will lend using rental history as genuine savings is 95%LVR + the lenders mortgage insurance. This will then equate to a total of approximately 98%LVR.

Hence if you are a first home buyer, you can also use the first home buyers grant to help complete the purchase, and source the rest of the money by way of gift from a family member or personal loan!

12 months of rental history, irrespective of the weekly amount paid will satisfy the requirements for genuine savings. The total rental payment does not need to equate to 5% of the loan amount being sought.

The maximum loan amount at 95% LVR using rental history as genuine savings is $1,900,000.

This loan amount will be secured over a $2,000,000 property and must be principle and interest.

Best of all, this maximum loan amount is eligible for special discounts because of the size of the loan of up to 1.2% for the life of the loan.

There are NO additional costs in setting up a loan using rental history as a form of genuine savings. Hence, when applying for this type of loan it does not cost any extra than a normal type of loan. Further the cost of the Lenders Mortgage Insurance (LMI) is the same cost as a normal type of loan.

Only a very small number of financial institutions offer rental history as a form of genuine savings. Hence, the majority of lenders do not accept this policy. Knowing which lenders do this and the difference in policy is very important as the policies do differ for particular applicants/borrowers.

The documentation required to be eligible using rental history as genuine savings is very similar to a normal loan. These include evidence of:

1. Rental history letter from real estate agent
2. Income statements like payslips or tax returns
3. Confirmation that borrower has a 5% costs/funds to complete the purchase. This can be in the form of a statutory declaration confirming they are to receive a gift. This can include confirmation bulk deposit held in applicants bank account
4. 100 points of I.D.

At Mortgage Providers, we have access to many lenders and know which lenders use rental history as genuine savings. Further, we know how to package these types of loans into very cheap normal home loan packages whilst also waiving the LMI.

Apply online and one of our brokers will be in touch with you.