When you apply for a home loan, the lender will request a wide range of information from you.
A lender needs to be sure that you’ll be able to meet your repayments and comfortably service the loan, so you’ll need to provide information about your income, your assets and your liabilities.
Lenders also want to see evidence of strong financial management on your part, such as your ability to make regular repayments towards a debt over a long period of time.
If you’re currently living in a rental property, the lender may request a rental reference letter from your property manager to provide proof that you won’t pose an unacceptable level of risk as a borrower.
Many lenders accept proof of consistent rent payments as genuine savings. This is because lenders want to see that you can manage your money and will continue to do so as a home owner or owner occupier. Paying rent on time serves this purpose in the same way that saving money does.
You will also have to meet several requirements, which vary depending on your rental history. For example, if you rented for less than six months, you can include such things as inheritance, gifts, work bonuses, tax returns and asset sales as part of your deposit. In most cases you will need a letter detailing how and when you will be receiving the monies or, if it’s an asset, proof that you have sold it.
If you have rented for more than six months you can use any deposit source as long as you can prove that you have made payments on time for at least six months; are still renting a property; and can provide a copy of your lease.