Wednesday, September 19, 2012

Different Standards and the Types of Savings Considered as Genuine Savings

Lenders in certain countries around the globe have introduced the idea of genuine savings for a loan application. Genuine savings policies are for everyone who wanted to apply for home loans the easier. The origin of this implementation is to respond the proliferation of first time home buyers that were applying for home loans with no savings or no deposit.

There are different standards that genuine savings that were made by lenders across the country. These are:

  • Some lenders would require 3% of the purchased value of the property which is usually applied to every first time buyers.
  • Other lenders would require 5% of the purchased price of the house that should be saved before being approved to buy it. 
  • Others would ask for 5%of the purchased price for a loan which is 80% at least o the value of the price. However, this will also depend both on the LMI product and the lender.
  • Some would not require genuine savings for mortgages that are almost 90% of the price of the property.
Furthermore, the following types of savings are considered as genuine savings but only if they will add up beyond 5% of the purchased value:
  • Savings which are mounted up for three months
  • Term deposit for three months
  • Shares or managed funds held for three months
  • Equity acquired in real estate but will depend on the lender

Ever wonder why they have put such restriction in home loans? It is for the reason that the lender will be put at risk if a borrower will fail to pay the loan. A lender who does not have a genuine deposit handled on a loan will have the possibility to not being paid back for a claim. Therefore, the lenders should implement the genuine saving standard.

Related blogs



at
Labels: , , , , , ,

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)