WHERE THERE IS A WILL AND GENUINE SAVINGS THERE IS A WAY!

Inheritances can be a bittersweet part of life, but an inheritance alone won’t always cut it when applying for a home loan. Having genuine savings can help show lenders that you have got what it takes to meet mortgage repayments. 

Many older Australians have accumulated a decent amount of wealth throughout their years, it is not uncommon for some of their younger family members to receive help into the property market when they pass away. But an inheritance alone won’t always cut it when applying for a home loan. 

In addition, you may be expected to show proof of genuine savings. Being able to put money aside to meet repayments is music to lenders’ ears. 

What Counts as Genuine Savings?

Genuine savings are funds that show off your savings progress. Lenders generally look for genuine savings that amount to % of the property purchase price. They also like to see that these savings have been held or accumulated for a minimum of three months. 

Some examples of commonly accepted genuine savings:

• Regular deposits into a savings account over a three month period.
• Term deposits held for at least three months.
• Shares or managed funds held for at least three months.
• A deposit paid to a real estate agent, builder or developer that was originally in a savings account prior to being paid.

Some lenders may also accept rental payment history as genuine savings. And some may accept equity in existing property, bonuses, cash gifts and even inheritance if it has been held in an account for at least three months, but then again… some may not.

Genuine savings policies often differ between lenders, so it is important to know just what will be accepted by the lender of choice and we can help with that

What does not count as genuine savings?

Here are examples of funds that lenders commonly do not consider:

• Gift from parents or family. 
• First Home Owner’s Grant (FHOG).
• Borrowed funds, for example money taken from a personal loan.
• Money from selling assets, for example selling a car to raise cash.
• Tax refunds.
• Inheritance. 

But ultimately it depends on the policy of the lender that you are applying with, because some of these examples, such as an inheritance, may be accepted under certain circumstances. 

How can I use my inheritance to buy a property?

Some lenders will allow you to use your inheritance towards genuine savings, but with caveats. They will need proof that the money is in fact yours.

The lender may ask for a letter of validation from the executor of the will. They may want to see a copy of the will and grant probate, which proves that it is legally binding. They will also want proof the amount has been deposited into your bank account, or they will want proof from the executor (or solicitor) showing you have legal access to the money. 

Furthermore, some lenders require you to hold the funds in your bank account for a minimum of three months before they will count an inheritance as genuine savings. 

It is important to get clear on the requirements from the lender of choice. 

Give Us a Call

If you are looking to use an inheritance for a home loan, give us a call. With different home loan policies for different lenders, it can be confusing. We can help you work out who accepts what for genuine savings and show you which lenders are willing to work with your inheritance. 

Phone: 1300 855 022

Email: clientservices@zippyfinancial.com.au