What is 'Genuine Savings'? Do I Need It?

Turn the clock back 24 months. The economy was booming, jobs were secure and house prices were growing faster than ever. Banks were lending up to 90%, 100%, even as much as 120% of the property value. The deposit was commonly the First Home Owners Grant or a gift from the parents or even a seperate loan. Then boom-time finished.

Banks started releasing statements like "Due to the increasingly volatile economic climate and rising unemployment levels the Bank is taking further steps to ensure it continues lending responsibly to customers. In particular, we are ensuring customers who are entering into more highly geared borrowings have a demonstrated savings pattern over time."

Instead of lending up to 120%, banks will generally now lend only 90% of the property value. Instead of allowing the deposit to be from almost any source, the lenders need evidence it is 'Genuine Savings'. But what is genuine savings? How do you prove you have it? And when will it be needed?

As a very general rule, when you borrow over 80% of your property's value you will need to have Genuine Savings - and proof of it. The Genuine Savings must normally be at least 5% of the property value. So how do the lenders ensure you have Genuine Savings and haven't just hocked your X-Box at Cash Converters? They generally require 3 months statements as evidence of one or more of the following:

• A demonstrated saving pattern established over a 3-month period
• Gift – must be held in an account for a minimum of 3 months
• Term deposit – must have been held for a minimum of 3 months
• Cash – acceptable only if placed in an account for a minimum of 3 months
• Shares – must have been held for a minimum of 3 months
• Equity in existing property
  However, be aware they probably will not accept the following as Genuine Savings:
• First Home Owners Grant (FHOG)
• Additional borrowed funds i.e. personal loan
• Proposed sale of an asset (other than property) i.e. sale of car

To wrap up, in most cases now when you borrow more than 80% of your property value, you need to show evidence of 5% Genuine Savings. Please bear in mind these are the most common guidelines, however every lender is different and they may be a way for you to buy sooner. Speak to your broker or mortgage professional for information specific to you circumstances.

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

Tips to Sell You House For More

If you are thinking of selling your home, or if you already have it on the market, of course you want to get the best price possible and you don't want to see it sitting on the market for longer than necessary. Making some small subtle changes to your property can mean a huge difference in the selling price and time on the market. Read through and see. Please add any other tips or experiences you may have for other readers.

INSIDE PRESENTATION

Ensure your house is clean and tidy
Remove any clutter.
Make sure windows are sparkling clean.
Check that all doors work well and doors don’t jam.
Think about how you arrange your furniture.
Consider obtaining advice of an interior designer.
Rub lavender oil into door jambs to provide a clean smell.
Shower screens, bathrooms and ovens should all be immaculate.

OUTSIDE PRESENTATION

Check gutters and remove any rust spots or debris
Mulch gardens and mow lawns, weed and prune shrubs
Replace any broken fences or missing pailings.
Ensure all gates are working properly
Clean paving to courtyards or pool areas.
Check all pool equipment is in working order.
Pool water should look inviting and well cared for.
Garages and carports should not be cluttered.
Try and store things away neatly.
Water features should be operational and well presented.

INSPECTIONS & HOME OPEN

Buyers will feel more comfortable when they inspect the house if the owner is not home.
Ensure the house is a comfortable temperature.
Brewing coffee creates a pleasant aroma throughout the house.
Open windows and blinds to create natural light.
Fresh flowers always add colour and are a must
Switch on your answering machine, phone ringing can be off putting for potential buyers.
If you are selling, or thinking about selling, with the intention of buying a new home you should speak with a mortgage broker sooner rather than later. Did you know you don't always have to sell your current home before buying the new one? I am a mortgage broker at Aussie Joondalup and am experienced with these loans. Contact me today to see how I could help.
0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au

Mike Cormack
Aussie Joondalup

Why You Need to Re-Check Your Pre-Approval Now

Pre-approvals are extremely valuable. They let the bearer know exactly what their lender will lend them. They streamline the process of getting the 'full approval' once a property is found. They can help in negotiating a deal with the Real Estate Agent too. But beware!

Pre-approvals will generally last between 3 - 12 months before expiring. It is important to remember they are not a guarantee of finance. If the lender changes their policy, if your circumstances change or if the property you choose doesn't meet the lenders guidelines, you may receive a decline.

What can you do to help safeguard yourself against these situations?

1. Check with your mortgage broker or bank regularly to see how their policies may have changed, especially right before making an offer on a home.
2. Don't make any dramatic changes to your own circumstances between the time you get your pre-approval and finding your dream house. I have had clients in the past who have quit their jobs, spent their deposit on a new LCD TV etc, taken out large car loans and had a child! Seriously! These sort of things could cause your pre-approval to become invalid. Again, check with your broker or lender if your circumstances change.
3. If you are borrowing money to buy a house always, always, always make the contract "subject to finance". Even if you have been pre-approved, there are too many things that could cause the bank not to approve your loan and you may find yourself in an unpleasant situation.
   
   So if it has been more than a few weeks since you obtained you pre-approval, or if you are about to put an offer on a new home, call your broker.
   
   Mike Cormack