Using a deposit from a property sale
Lenders want to see genuine savings, but in some cases this is not as straightforward as it may seem. Especially when you have recently sold a property and want to use proceeds from that sale as a deposit for your next purchase.
What are genuine savings?
Genuine savings are required by a bank to evidence your ability to consistently save towards a goal, and is thus a good indicator as to how likely you are to repay your mortgage.
These genuine savings can be:
- Cash saved over at least 3 months
- Equity held in a home
- Historical rent you have paid
Will banks consider sale proceeds as genuine savings?
Yes! Although most banks usually want to see consistent savings, the proceeds from the sale of property will still be classified as genuine savings.
Why do lenders accept the sale of a property as genuine savings?
Lenders accept settlement proceeds as genuine savings because there is usually a mortgage against the property that you have just sold. Therefore, just like historical rent can be used as genuine savings, most lenders will also be able to consider historical mortgage payments as evidence of genuine savings.
If you are relying on sale proceeds as part of your deposit, it is important that you remember that there will be a number of fees that may be payable out of that total amount. Therefore, you need to ensure that your overall funding position will be enough to avoid any shortfalls
Our brokers are experts with structuring deposits from proceeds of property sales and finding you the best lender. Give us a call today on 13000 656 600 to find out more or enquire online and one of our brokers will contact you.