When you’re trying to get a home loan, traditional lenders will typically demand a 20% deposit. But what you might not know is that there are requirements for how you get that deposit. Most lenders will require that a portion of your deposit is what they call “genuine savings”. But what are genuine savings? To help you out, this article is going to go over everything you need to know about genuine savings and your mortgage.
What is the Definition of Genuine Saving?
Genuine savings are broadly defined as money that you steadily save up over time. Typically meaning money earnt and saved from employment. Large lump sums generally aren’t included. Traditional lenders will require a portion of your deposit to be genuine savings. Some examples of lump sums that aren’t considered ‘genuine’ savings, include:
- Selling an asset (like a car)
- Tax refunds
There are exceptions to these rules, but they depend on which particular lender you’re dealing with. It can be near impossible to know the intricacies of how all the different lenders operate. And even when you talk to a lender, they may not give you a full breakdown of the requirements or exceptions.
On other hand, here at No1 Property Guide, we believe in giving you all the information you need. So you can be fully educated and make an informed decision about whether you want to stay renting or finally achieve your homeownership dreams. Unlike traditional lenders, Darren’s unique no or low deposit new home system gives you the ability to get into your own home without a full deposit, or even genuine savings.
What Counts as Genuine Savings?
In general, most lenders will all accept the same kind of savings as genuine. These usually include:
- Savings that have been held for more than 3 months
- Equity in your property
- Your regular income
In some cases, your rent payments can go towards your genuine savings as well.
Do Shares & Investments Count as Genuine Savings?
Shares and investments do count as genuine savings in most cases. However, you will need to prove you’ve owned them for more than 3 months, and that they’re easily convertible to cash. There may also be additional requirements and paperwork, but this all depends on the individual lender.
Can Rent Payments Count Towards Genuine Savings?
Some lenders will allow you to add rent payments towards genuine savings if you can demonstrate you’ve got a strong rental history. This option is limited to only a few lenders and the way it’s applied changes between them.
Is It Possible to Get a Home Loan Without a 20% Deposit?
Put simply, yes!
Renters who thought they’d be trapped in the rental market forever are now homeowners thanks to Darren’s system. The only difference between you and them is that they took the first step.