3 Types of Savings You Can’t Use as Deposit for Mortgages

Savings You Can’t Use for MortgagesA deposit is an essential component to obtain a mortgage. Generally, 100% financing no longer exists in Victoria, so you’re most likely required to put down at least 5% of the purchase price of the property you’re eyeing.

But lenders won’t just accept any money as your down payment. Most mortgage providers are particular of the source of your funds to see how capable you are to repay a major of debt over a long period. This is why you must prove you have genuine savings to begin with. About nine out of ten times, a traditional lender wouldn’t accept a deposit, no matter how large, if you didn’t save it yourself.

What are the funds that don’t qualify as genuine savings, you say? Here are some of them:

Personal Loan

Money coming from another debt isn’t legitimate savings. You can’t get a personal loan, put and keep the funds into your bank account for three months and convince the lender you actually save it.

In addition, a personal loan increases your debt-to-income ratio, thus make you a riskier borrower.

Gift from Family or Friends

Receiving financial gifts from relatives and friends is not unheard of, especially if you’re planning to buy one of the most sought-after houses for sale in Wyndham Vale, Werribee, Point Cook, Burnside Heights or other rising Melbourne suburbs. However, such monetary donations are accepted as genuine savings because, obviously, you didn’t personally save the funds.


The First Home Owner Grant is likewise not genuine savings. Although the purpose of this one-off grant is to help you buy or build your first home, you still can’t use it as a deposit for your home loan.

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The spirit of providing a deposit is to show lenders that you have the willingness to save and capacity to shoulder a huge financial obligation every month for a long time, Manor Lakes, a provider of houses for sale in Wyndham Vale, near Point Cook, advised. It should go without saying; you must save the money yourself and properly place in your bank account to be considered as genuine savings.