5 Tips to Ensure Your Savings Are Genuine Before Applying

Genuine savings is an important aspect of a property purchase, especially for first home buyers. Yet many loan applications face rejection because they fail to meet a lender's genuine savings policy.

Not understanding these requirements can be costly. If a buyer has already found a property, failing the genuine savings test can lead to delays of several months or even the loss of the purchase.

Banks enforce strict rules around genuine savings, leaving little room for interpretation. Lump sum deposits, gifted funds, tax returns, inconsistent savings history, and cash deposits are common reasons a lender might not accept savings as genuine.

Cash deposits More often than not, a bank will not accept a cash deposit as genuine savings unless it was deposited more than three months ago, as there is no clear way to verify the source of the funds.

Gifted funds Waiting until a property is found to receive a financial gift can cause issues. Some lenders consider gifts as genuine savings only after the funds have been held in a savings account for over three months.

Additional account holders If another name is linked to the savings account, proving which portion of the funds belongs to the applicant can be difficult for a lender.

Lump sum payments Lump sum payments and large deposits often raise questions with lenders, especially when they fall outside a normal savings pattern. For example, regularly putting away $500 once or twice a week shows a clear pattern, whereas a sudden $5,000 deposit prompts the bank to verify where the money came from.

Monthly pay cycles Transferring all savings in a single monthly payment requires caution. While it is possible to prove the funds came from income, a lender may request full transaction statements to trace the flow of funds. This opens every transaction on the account to scrutiny, where an unrelated transaction from months prior could create issues.

Tips to demonstrate genuine savings A few simple practices can help savings meet a lender's genuine savings policy:

1. Always transfer funds directly from a personal transaction account into the savings account. 2. Avoid making branch cash deposits into the savings account. 3. Hold any gifted funds in a savings account for at least three months prior to a finance application. 4. Ensure the savings account is strictly in the applicants' names with no additional account holders. 5. Keep transfers consistent, ideally keeping individual transfers under $1,000 where possible.

Addressing existing issues If large sums, cash deposits, or recent gifts have already been deposited into the account, time and proper documentation may help repair the savings history. Taking a proactive approach from the start—maintaining consistent, smaller transfers and avoiding lump sums—helps ensure savings meet lender requirements.