can this really be true for buying without a deposit.

someone mentioned the following and i'm wondering if anyone knows more about this

its regarding not being able to save for a deposit once one is in the renting cycle.


'Some lenders may count rental history as genuine savings. This might be worth exploring when pondering how to get a deposit together and where to secure finance.'

does anyone know more about this please. as they can pay rent or a mortgage but with payng rent they cant save a deposit which stops them buying and makes them waste on rent for years.

 

No not possible

They are confusing the deposit with genuine savings - rent paid may be able to be used as evidence to prove the person has the ability to save.

I don't deal with first home owners so am not sure if banks accept this at the moment.

 

By the sound of it, I'd say it's probably more related to the high LVR packages.. where you only need a smaller deposit (instead of the regular 20%) but you'll need a decent income history AND demonstrated ability to save.
If you don't have an accumulated savings history, these particular lenders might allow the regular rental payments to qualify instead.

I'm only guessing though. I'm no MB, and I've never come across or had the need for this..

 

If you have high enough borrowing power it may be possible to take a personal loan for a deposit and use rental history to demonstrate genuine savings. Pair this with the first home owners grant and you may be able to get into a property with 'zero' savings.

 

Whilst this may be possible IMO this is not at all prudent lending. Someone who has a high income who can't save any money getting a personal loan to buy a property.

Adelaide Bank I think it was use to package this, common sense I think prevailed.

 

I agree!

 

What about zero % balance transfer instead of personal loans if one has high borrowing power such that few CCs doesn't effect one serviceability by much?

 

I could be possible, I think you are charged interest from day one on a cash advance so you would want the balance transfer done ASAP. I personally have never done one so I can't say for sure.

 

The way I would do it is,

• Open an ANZ cc with low credit limit of 3k, don't use it for anything.
• Then apply two cc from STG with zero% BT 18 mnth offer, specify full BT to ANZ card,
  each card is usually 20k limit which gives a BT of 19k per STG cc.
• Now ANZ has total available credit of 3K + 19k + 19k
• Now withdraw 19k + 19k from ANZ cc as cash transfer (Do not touch 3k limit ),
  this is your money so no charge just a min transaction cost of 2/5 $ depending on bank.
  
• Make sure you don't use STG BT cc's till you return full BT amount just before its expiry.
• This way I get 38k on 0% for at least 17.5 months.
• Key here is to return BT amount right before its Zero BT expiry period, as any delay in this will be charged as a CC cash transfer at 20+%.

PS: Please do your own due diligence,

 

even for a person/couple with very high borrowing power compared to loans they are taking?

 

We've been using this across a few different lenders here in WA.

15k FHOG for those building - can be used as genuine savings if applicant meets lender criteria. Most applicants need to have 3-4k of their own funds too though.

 

Genuine savings is a test lmi providers give fhbs. Usually 5% of proposed purchase saved over at least 3 months. Some will let rental history 'pass' the test.

Funds to complete, or deposit is the difference between the loan amount and the full cost of the property, including stamp duty legal and bank fees like LMI.

 

Fhog is seen as a gift, not genuine savings. Fhb have had to pass the test another way. Usually rental history. It's not banks taking fhog as genuine savings.

 

Yes, Fhog used as deposit. Applicant must meet criteria as per my post.

 

Your post actually said fhog used as genuine savings, not deposit.

It's a common error.

 

Yep agree, poor choice of words.