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NAB is the first of the big four banks to reduce interest rates ahead of the RBA’s expected cash rate cut next week.
As of Monday this week, NAB’s lowest fixed rate now stands at 5.84% for owner-occupiers with a 20% deposit, paying principal and interest on a three-year term.
Curiously, whilst NAB is the first of the Big 4 banks to move in this manner, they were the last of the major banks to call an interest-rate cut when the central bank meets in February.
This time next week, fingers crossed, we’ll be reporting on an RBA cash rate cut and all the lenders will lower their rates.
In the week’s newsletter, we answer the question: Does Gifted Money Count as Genuine Savings for First-Home Buyers?
Saving for a home deposit can be challenging, and many first-home buyers rely on financial help from family. But when applying for a home loan, lenders assess genuine savings—funds that show a borrower’s ability to save over time. So, does gifted money count as genuine savings?
What Are Genuine Savings?
Genuine savings include money that has been saved consistently for at least three to six months. Banks use this to assess financial responsibility. Examples include:
- Regular savings account deposits
- Term deposits or shares held for at least three months
- Equity in an existing property
Is Gifted Money Considered Genuine Savings?
No, gifted money is not immediately considered genuine savings because it does not demonstrate a borrower’s ability to save. However, some lenders will accept it if it has been in the borrower’s account for at least three months (a process known as “seasoning”).
How Do Banks Assess Gifted Money?
If you receive gifted money for your deposit, lenders will typically require:
- A Gift Letter – A signed document from the giver stating that the money is a gift with no expectation of repayment. Some banks require it to be witnessed.
- Proof of Transfer & Bank Statements – Evidence of the funds being transferred into the borrower’s account.
- Genuine Savings Requirement – If the borrower has at least 5% genuine savings, lenders may accept a gifted deposit as part of the total deposit.
How Can Gifted Money Be Used for a Home Loan?
Even if it’s not genuine savings, gifted money can still help:
- Season the Funds – Leave the gifted money in your account for at least three months so it may be accepted as genuine savings.
- Use a Guarantor Loan – A parent can act as a guarantor, removing the need for genuine savings.
- Choose a Flexible Lender – Some lenders don’t require genuine savings, especially if Lenders Mortgage Insurance (LMI) is used.
Final Thoughts
Gifted money can help with a home loan but is not always considered genuine savings. Before applying, check lender policies, get a formal gift letter, and explore options like a guarantor or a flexible lender.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
