FIRST-HOME BUYERS…HOW TO PASS THE GENUINE SAVINGS TEST.

Reception • March 19, 2018

Dipping a toe into the property market for the first time can be a learning curve on a number of fronts. A first-home buyer (FHB) can often find lender policies confusing when trying to understand exactly what they need to do to meet requirements.


The concept of ‘genuine savings’ is potentially puzzling, and it doesn’t help when each lender tends to have their own policy.


Now, you’re probably thinking, “But surely savings are savings?” Well…not necessarily. As part of a lender’s assessment of your suitability as a ‘good borrower’ they require evidence of your ability to plan and save for a deposit yourself.

Definition of genuine savings


This term is used by lenders to define the amount of funds a home loan applicant has ‘genuinely’ saved over time. Requirements may differ depending on the total amount you borrow. For instance, if you have:


  • 20% deposit – proof of genuine savings is not required
  • 15% deposit – proof of genuine savings is not required by most lenders
  • 10% deposit – most lenders require proof of genuine savings
  • 5% deposit – all lenders require proof of genuine savings



What are considered ‘genuine savings’?


The following are generally considered ‘genuine savings’ if they add up to more than 5% of the purchase price (10% if you are an investor):


  • savings held or accumulated over 3 months
  • term deposits, shares or managed funds held for 3 months
  • equity in real estate (this can vary between lenders)


Some lenders require a six-month savings history. If you have been renting for more than three months, there may be some exceptions to the above.


Of course, you can pay more than the minimum deposit, and the remainder of your deposit may come from any source, as long as you have met the lender’s genuine savings criteria for 5% of the purchase price e.g. when buying a $600,000 home, you will need to show $30,000 in genuine savings.



What DOESN’T count?


The following are NOT considered ‘genuine savings’:


  • cash gifts
  • inheritance
  • tax refunds
  • bonuses
  • savings plans
  • selling your car or other assets
  • First Home Owner Grant (FHOG)
  • funds held in a business account
  • borrowed funds e.g. personal loan
  • lump sum deposits (funds from the sale of property is an exception)
  • developer/builder rebates or incentives



The power of rental history


If you have a strong rental history, some lenders may make an exception and consider other sources e.g. a gifted deposit from parents.

However, there WILL be criteria you will have to meet, and your rental history will have to be proven.


If you’re a renter considering future property ownership, it pays to know what lenders look for as part of their ‘rent exception’ assessment.


At the time of your loan application, the home loan applicant(s) must:


  • be currently renting
  • have a minimum six months of satisfactory rental history and on-time payments
  • be listed as tenants on the lease
  • be renting via a licensed property agent or privately (NB: private rentals may be assessed on a case-by-case basis)


Don’t think renting will make the process easier. Lenders will be tougher if there are no genuine savings in a bank account. They will analyze how you manage your money through your savings and spending history. Even if they assess rent as genuine savings you will still need to prove you have the deposit (or ‘funds to complete’) at the time of your application.



The most crucial tip?


Make sure you have your loan application ready BEFORE you apply. As your finance specialist, we have extensive experience across a range of lenders and will do the legwork for you.


The earlier you contact us on your path to home ownership, the earlier we can assess your situation and provide guidance on how to get you to where you want to be.

*Disclaimer: This article is generic in nature. All investment decisions should be considered wisely and based on your personal and financial circumstances. Seek proper advice before committing to any course of investment action. This is not deemed as advice.

4 Tips For Finding That Perfect High Yield Property

By Kola Dev • March 19, 2025
Any property guru worth their salt will tell you that a dream property investment has nothing to do with a prestigious address or sleek amenities. The ultimate goal, is to find that perfect “high yield” property that will give you maximum returns for as little input as possible. Yield refers to the amount of cash a property produces as a percentage of its value and is calculated by the rental income you are receiving compared to the purchase price. There’s a lot more that goes into the calculations, which I’m happy to run you through, but to give you an idea on what to look for, I’ve put together some simple tips. 1. Do your research. There are plenty of stats out there that will give you the median rental yield for each suburb. This is a great place to start! 2. Look for dual income properties such as a house with a granny flat. You can potentially have two streams of rent coming in, meaning the chance for a higher rental yield significantly increases. 3. Have you thought about looking rurally? Country towns offer some great properties at a low price and because the cost of living is low, the rental yields tend to be higher. 4. Always think forward. Be on the lookout for up-and-coming areas and ask yourself if they’ll still be flourishing in five years time. At the end of the day, you need to be realistic. Just because a property has a high yield doesn’t mean it’s going to be a great investment. As a mortgage broker, I can talk you through your options for investment loans so you can see what your monthly outgoings might look like. Please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment.

7 Quick Ways to Upgrade Your Home

By Kola Dev • March 19, 2025
The continuing boom in property prices has tempted many homeowners to invest in renovations to maximise the value and then put their home straight on to the market. There’s no doubt you stand a better chance of enjoying a great return on your investment if you modernise your home. Properties that enjoy a mix of the traditional and the contemporary are in big demand among today’s buyers and nothing ticks the boxes more than a brand new kitchen or bathroom. Two increasingly popular features at the moment are a dedicated home office and a design that connects the indoors with a garden or entertaining area. But renovation projects of this size can become expensive. If your budget doesn’t allow for large-scale upgrades, there are plenty of ways to enhance the value of your home at little cost. Here’s a seven-point guide to upgrade your home. 1. Break out the brushes It’s amazing how a fresh coat of paint will improve a property. Don’t focus only on the walls but attend to the skirting boards, ceilings and architraves. Select neutral colours as these make rooms feel bigger. 2. Go green Small-scale improvements to your gardens work wonders. Focus on the front yard as this creates an all-important first impression. 3. That’s entertainment If your property lacks an area to entertain, this is a great low-cost project to enhance your property’s desirability. Consider adding a deck or a barbeque area. 4. Floor ’em A mixture of different floor types can make a home feel bitsy while a home with consistent flooring creates a great sense of flow. Replacing the floor can be a painful project but you’ll be amazed how much bigger your home feels. 5. Say it with storage You can never have too much storage. A bedroom without built-in robes is just asking for clothes on the floor. Think about storage in bedrooms, bathrooms, kitchen and laundry and looks at ways to create clever storage solutions in nooks and under the stairs. 6. Kitchen upgrades If yours is a little tired, don’t worry – you don’t have to rip it out and spend big dollars. Consider replacing only the doors, drawers and handles. You’ll achieve a transformation at the lowest possible cost and it will feel like new. 7. Unbeatable bathroom Like the kitchen, this can be an expensive renovation. You can avoid replacing tiles by using a professional company to spray-paint them. This treatment can also be applied to sinks, baths and showers. New tapware and shower screens complete the refresh for a fraction of the cost of ripping and replacing. Please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment. *This article is provided for general information only and does not take into account the specific needs, objectives or circumstances of the reader. Before acting on any information, you should consider whether it is appropriate for your personal circumstances, carry out your own research and seek professional advice.

7 Tips for Organising Your Finances Before You Buy A Home

By Kola Dev • March 13, 2025
There are many tips for buying a property, but there’s one essential element that no one can avoid - getting your finances in great shape before you start. Knowing what you can afford is a critical element of finding your first home or the next one that takes you higher up the property ladder. The most successful buyers begin their search with their finances in order and a pre-approval letter from their bank or lender. They know their budget and tailor their efforts accordingly. There’s no greater waste of time than visiting properties that are beyond your price range. Using a mortgage broker can help you shortcut the hours of research through various banking products and good brokers have detailed market knowledge and can offer an array of products. We can suggest the loans most suitable to your circumstances and assist you with paperwork, and review your credit history. We can also help you understand any grants or tax exemptions from state and federal governments that you may be eligible for. Below are a few tips for securing the finance that will help you find your dream home. 1. Clarify your finances If you’re a homeowner, you’ll need to obtain a valuation on your current property and provide proof of current earnings. A first-time buyer will ideally have 10% of the purchase price as a deposit to get the best interest rate and conditions for their first loan but the more the better. Money for legal fees, property inspections and taxes need to be set aside, too. Make sure your tax returns are up to date to prove your earnings. It will make life easier. 2. Low barrier to entry You can obtain a conventional loan with as little as 5% of its total as your deposit. Some government-backed loans do not require a deposit. 3. It pays to save The more you save, the less you borrow. And that means lower your monthly repayments for you over the term of the loan. 4. Go for a grant First-home buyers should research the current grants from various levels of government that are designed to encourage them into the market. 5. Credit crunch You’ll need a good credit history to be attractive to lenders. Check yours out by using companies such as Experian and Equifax. If your track record is not the best, we can discuss ways to address this. If errors appear in your credit history, dispute them immediately. 6. Find the right loan You can save thousands of dollars by choosing the right mortgage product for your situation. It pays to shop around and make a note of not just the interest rate but the fees that come with it and other services that may be offered. As your mortgage broker, we can guide you through this process. 7. Be pre-approved A written undertaking from your lender will help you focus on what you can afford, as well as signal to a prospective seller and their agent that you’re not kicking tyres. Watch out for lenders who will only “pre-qualify” you, as this represents only an estimate of what you can afford and does not offer any guarantees of intention to lend. Please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment.
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