When you apply for property investment finance, most major Australian lending institutions will require you to contribute a portion of the balance of the purchase price as ‘genuine savings’ – especially if contributing the minimum amount of deposit required. This is usually between 5% and 10% of the property’s valuation. Each lending institution has a different set of rules and criteria but your genuine savings can generally be a mixture of any of the following:
- Savings held or accumulated over three months or more;
- Cash or a term deposit held for three months or more;
- Shares or managed funds held for three months or more;
- A gift held for three months or more;
- Equity in real estate (varies depending on the lender);
- Inheritance held for three months or more;
- If you have been renting for three months or more some exemptions may apply depending on the lender.
For more informaiton on what genuine savings are, what is exempt, you obligations and why genuine savings are important when applying for investment finance, see our full article, Investment Finance: the Criteria for Genuine Savings.