How Does Genuine Savings Work in Australia?

In Australia, lenders typically look for at least 5% of the property’s value as genuine savings taken from your personal funds. For example, on a $500,000 property, you’d need a minimum of $25,000 of genuine savings.

Key points:

• Genuine savings must be accumulated over 3 to 6 months before applying.
• Savings need to be banked in the applicant’s account, not just held in cash or assets.
• Source of funds must be traceable—such as salary, savings, or legitimate gift.

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Common Sources of Genuine Savings

Understanding what counts as genuine savings helps prevent surprises during the application process. The sources include:

• Employment income: Salary, wages, or regular business earnings.
• Savings accounts: Money already saved in your bank account.
• Superannuation (super): If you are an Australian resident, super can sometimes be counted.
• Gifts from family: Must be documented and not repayable.
• Sale of assets: Such as property, shares, or vehicles, with proof of sale.
• Overseas savings: Funds transferred from abroad, as long as they are declared and traceable.

What does NOT count?

• Gifts without documentation or that are borrowed.
• Market investments like shares or property, unless sold and funds transferred.
• Cash savings held outside the bank for more than 3 months—may need to be deposited first.

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Documenting Your Genuine Savings

Lenders require proof to confirm your savings:

• Bank statements: Showing regular deposits or lump sums.
• Transfer history: Especially for overseas funds.
• Gift letters: Signed by the giver, stating the amount and that it’s a gift, not a loan.
• Sale contracts: For assets sold to generate cash.

Tip: Keep detailed records of all transactions. These documents speed up the process and clarify your savings’ origin.

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Strategies for Building Genuine Savings

Building genuine savings takes time but is achievable with discipline. Consider these tips:

• Automate your savings: Set up regular transfers to your savings account.
• Cut unnecessary expenses: Free up funds to boost your savings.
• Contribute to your super: If eligible, this can be counted towards your savings.
• Use offshore savings wisely: Transfer funds with proper documentation.
• Avoid large, unexplained deposits: These may raise questions during assessment.

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Special Considerations for International Buyers

Buying in Australia brings additional hurdles. Here are some tips specific to you:

• Foreign income & savings: Lenders need proof that funds are legitimate and sourced correctly.
• Currency conversion: Use the current exchange rate; avoid quick conversions that might seem suspicious.
• Overseas accounts: Deposits from overseas must be traceable through official transfer records.
• Visa status: Your eligibility depends on your visa type. Some visas require additional criteria like residency or time in Australia.

“In my 20+ years helping migrants secure mortgages, I've seen that transparent documentation and understanding local rules make all the difference.”

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How Genuine Savings Affect Your Mortgage Eligibility

Lenders look at genuine savings to gauge your financial discipline. The higher and more consistent your savings, the better your chances.

Additional factors influencing approval:

• Deposit size: Larger deposits reduce the loan-to-value ratio and Lenders Mortgage Insurance (LMI).
• Income stability: Regular employment or income sources.
• Debt levels: Lower existing debts improve your borrowing capacity.
• Credit history: Good credit scores help, even for first-timers.

Note: Some lenders might accept alternative evidence like repayment history or assets if genuine savings are not fully established.

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Overcoming Challenges

Many applicants worry about meeting these criteria. Here’s how to navigate common hurdles:

• Limited savings: Focus on building savings over time, and consider government grants for first-home buyers.
• Source of funds: Be honest about your savings origins. Transparency builds trust.
• International transfer delays: Plan ahead to ensure funds arrive and are documented before applying.

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Summary: Building Your Genuine Savings

Achieving genuine savings takes planning. Start early, keep clear records, and understand what lenders want. With consistent effort, you can strengthen your mortgage application and unlock future opportunities.

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Final Thoughts

Genuine savings is more than just a bank balance. It reflects your financial habits, discipline, and ability to manage your money. Whether you're saving from your income or transferring funds from abroad, transparency and proper documentation are key.

By understanding and demonstrating genuine savings, you'll set a solid foundation for your property journey in Australia. As I always advise my clients: "Preparation and honesty are your best tools in securing a mortgage."

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References & Further Resources

• Australian Securities & Investments Commission (ASIC): Understanding Home Loans
• Reserve Bank of Australia (RBA): Interest Rates & Lending
• Foreign Investment Review Board (FIRB): Property Purchase Guidelines
• First Home Loan Deposit Scheme: Eligibility & Benefits

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Embark on your property journey with confidence—master genuine savings and turn your homeownership dreams into reality!