Genuine Savings effect on Loan Applications

2010 March 22
by iggy

People who apply for a mortgage will often hear the term “genuine savings”. The banks and lenders often require genuine savings before granting a loan. This is to give them extra protection, as those with genuine savings are often able to make the regular repayments required for loans.

On the other hand, those without genuine savings have a higher rate of default as they usually find it difficult to make repayments on time due to their inability to save.

To better understand what genuine savings are there are some certain criteria that banks require before they consider a certain amount of money to be genuine savings. This usually refers to money that has been held in a savings account from three to six months, or money saved from your income for three months. Genuine savings can also be equity in an existing property, or can consist in net proceeds from a sale of a property.
Once your money meets one of the above criteria then the banks can consider it as genuine savings. However, it is possible to get a home loan even without genuine savings.  This may be possible if you have received a substantial amount of money, enough to make a deposit. This fact does not ensure that you will get loan approval, as you still need to prove that you will be able to make the necessary regular repayments. If this fact cannot be proven, then it will be unlikely that your loan will be granted. Those with genuine savings and who can make a deposit will have a higher chance in getting loan approval.

For more information on genuine savings, and loans that require genuine savings, it would be best to consult the experts on home loans. They can provide you with the information necessary to gauge if it is possible for you to claim genuine savings, or if you do not have any, how to go about getting a loan without genuine savings. They will go through the nitty gritty details with you to help you get your home loan approved.

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