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Q&A about home loans with Obu Ramaraj, The Mortgage Angel

Most Australians share the goal of owning a house. However, not everybody should buy a house until they have a basic knowledge about home loans. You need to keep in mind that your house will be one of your most valuable assets and you have to equip yourself with all the knowledge you need so that you can make a purchase you won’t regret. Also, a home loan is one of the biggest debts that can stay with you for a long time.

Have a Checklist

This basically entails that you need to write everything down – your goals, all the research, the contacts and anything else you need to document. Moreover, all the things you need to do in a step by step manner. If you are new to this idea, then it’s best that you ask help from a mortgage broker who has your best interest at heart.

The Home Loan Jargon

Terms like “offset account”, “lenders”, “lenders mortgage insurance”, “credit scoring” and other terms can be a bit overwhelming. And if you really don’t understand, you should ask a professional. When you meet a lender or a mortgage broker, many a times they do not spend the time to educate you on the basics.

Mortgage Plans

It is not just enough to go ahead and get a loan without a plan. Most people assume a loan is for 30 years and work on paying it in 30 years. However, you should have a goal and a plan to pay it off sooner. Are you going to fix your loan or should it be variable? Think through and get some help if you need to plan to pay it off in 5 or 10 or 15 years time.

Different Types of Loans

There are thousands of loans available that you can choose from, many of which are not available through a branch that you can walk into. Thus, it’s highly important that you identify the right loan that is suitable for you.

Are you looking to buy your first property?

Do you have lots of questions, but no one to answer?

Or, you just want to buy, but don’t know what questions to ask?

Are you feeling overwhelmed about the home loan process?

If you answered YES to any or all of the questions above, then I cordially invite you to our FREE Question and Answer Session with Obu, the Director of Smart Money Solutions regarding any burning questions you have about Home Loans.

When: Fortnightly starting 29th January at 7:00 PM

Click Here to register for the webinar.

First home buyer, but no genuine savings. How do you get a loan?


“Can you buy a house without any savings?”

There isn’t a straightforward ‘yes or no’ answer to this question. In short if you think you can buy a house without spending a penny, that is not possible.

Then, the answer to my question will be – yes, you do need savings to buy a house.

So, the logical next question would be – ‘how much money do you need to buy a house’? The maximum that you can borrow from any lender is 95% of the property price. Some of them let you add all or part of the lender’s mortgage insurance (LMI) on to the loan and some of them lend a max of 95% inclusive of LMI.

In short, banks want to see that you have saved at least 5% of the house price. And, they want to see that you have saved this money from your income. Often, you hear the term “genuine savings”.

What is genuine savings?

Genuine Savings is defined as a demonstrable savings pattern established over a minimum period of 3 months in the name of at least one borrower prior to the loan application being received.

Genuine savings can be from any of the following sources:

  • Savings pattern – established over 3 month period with regular or sporadic deposits
  • Gift – if held in the applicant’s account for 3 months or more
  • Sale proceeds of shares or managed funds
  • Equity in or from real estate
  • Additional loan repayments that are redrawable
  • Inheritance – if held in the applicant’s account for 3 months or more
  • Term Deposit – held for 3 months or more

A few banks have now identified that as a renter, it can be hard to save the 5% while you are paying rent. In some cases, where the 5% deposit may be a gift or a bonus or a lottery win, and if you have been renting for six to twelve months with good conduct, they will consider the 5% in your bank account as genuine savings, even though it has been in the account for less than 3 months. 

So, if you are a first home buyer with a deposit in your bank account for less than three months and want to buy your first property, contact us on (03) 9005 3983 to see how we can help you with your dream.