In the lending industry, the term genuine savings is used to define whether the funds that are to be used as a deposit by a borrower have been saved genuinely over a period of time.
Genuine savings are a way for lenders to risk rate a client. What constitutes as genuine savings varies from lender to lender, and in some cases, it may not be required at all.
This article entails the important aspects of genuine savings to help with your loan application.
To grant you the loan, most of the lenders require you to prove that you have genuine savings. Majority of the lenders require 5% of security value in genuine savings. Let’s say, if you wish to purchase a $250,000 home, you’ll need $12,500 in genuine savings.
You must have additional savings to pay for the expenses that are associated with a purchase. This may include solicitor’s fees, stamp duty, government charges and other costs.
Generally, lenders and their insurers want to see that savings have been accumulated or held over a period of three months. This may sound simple but it can get pretty confusing.
Whether or not genuine saving is required depends on the type of loan and the lender. Generally, genuine savings are not required for any loan that is below 80% of your home’s value. Some lenders may need genuine savings for 85% home value. Most of them require it for a loan that is above 90% of your home’s value.
The following are generally considered as genuine savings:
Some banks demand a saving history of six months instead of three months required by most lenders.
It is also important to understand what is not considered as genuine savings. The following are not classified as genuine savings:
There are some options for you when you do not have genuine savings. These are:
If you are facing problems with your loan application or want to learn more about genuine savings, get in touch with Josh Financial Services as our experts can help you work through your individual situation.