No Genuine Savings for Home Loans

2010 March 15
by iggy

Often, the primary requirement of banks in order to acquire and approve a home loan is an initial deposit of at least 20% of the value of the property being purchased. If this deposit cannot be made then banks and lenders will often ask for the borrower to get LMI in order to cover the risk of not having any deposit.
However, for some lucky people out there they may be capable of acquiring a home loan although they may not have any of their own money to pay for a deposit. Generally it is due to the willingness of their parents to help them out, or a large cash gift from a relative, which enables them to have money for an initial deposit.
However, for banks this is another risk for them to take. This is because of the fact that although these people may have enough for a deposit, they do not have any genuine savings of their own. Due to this fact, they may not be able to make future repayments, as they have no proof of income and earnings to pay for the recurring payments.
In order to be able to understand this fact better one has to understand what genuine savings is. Genuine savings is money saved and kept in the bank for at least three months. Hence, a long term deposit or a three month old savings deposit should qualify.
However, this is not a strict requirement of banks so it is still possible to get a home loan even without the presence of genuine savings. Other documents may be required such as a gift letter from the parents to further reduce the risk of the bank.
Once the required documents are submitted then it is possible for the bank to evaluate your home loan application for approval.
In order to increase the chances of your home loan being granted it would be best to consult the experts on home loans. They can provide you with information and advice on how to get a loan although you do not have any
genuine savings to speak of.

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