Many home buyers entering the property market can raise the required deposit. However, raising that money in one’s own account can be troubling for some buyers.
Hence, lenders have created a 10% (ten percent) non genuine savings product. Simply put, as long as a borrower can show he/she has the 10% deposit (which could have come from a variety of sources) then the lender will lend him the remaining 90% of the funds required to complete the transaction.
The 10% non genuine product will not be found within all lending institutions, but it is definitely available and is in popular demand. Within the 10% non genuine suite of products, you could get any of the following types of loans:
|100% Offset loan||Basic loan||All In One loan|
|Fixed loan||Professional package||Construction loan|
|Line of credit||Standard Variable||Honeymoon loan|
Although mortgage insurance is required and is a one-off, upfront payment when the loan is taken, it is worth noting that the cost of the lenders mortgage insurance is approximately 5-20% higher than a genuine savings mortgage insurance premium.
Our consultants at Mortgage Providers can provide you with an accurate cost of the mortgage insurance payable by yourself for this type of product with different lenders, and Lenders Mortgage Insurance (LMI) providers. This will help you make an informed decision of the cost associated with such a loan moving forward.
What is Non Genuine Savings?
When a client cannot verify his/her savings pattern over a 3 month period or more, yet he/she has savings, a lender could treat this under a non genuine savings policy. Although this policy is not widely known as being available, it can be found within several major lending institutions and is popular.
A typical non genuine savings client is someone who has the deposit for a home ( generally 5-10% or more), but does not have that money in a bank account for 3 consecutive months or more. This person also does not have equity in a property, shares, or managed funds. This client is also the type who could go and deposit the money into his/her bank account a day before applying for a loan as he/she could have the money in cash at home or recently sold an asset like a car which is the most common example.
In addition, a typical non genuine savings applicant is someone who raised or received their deposit by way of a gift or inheritance from a family member. This is especially such, with parents taking on the responsibility of taking their children’s savings and parking this money under their own name/s to guarantee the savings of their children. Yet, when the person is ready to enter the property market for the first time, his/her entire saving is held in the name of the parents. This is particularly common amongst people from Non English speaking backgrounds. Lenders and mortgage insurers have recognized this, and have a created a non genuine savings policy and product to suite these types of clients.