What First Home Buyers Need to Know: Genuine Savings, Credit Scores & Debt Impact

💰 What is 5% Genuine Savings?

When you apply for a home loan with a smaller deposit (especially less than 20%), most lenders want to see genuine savings, which is money that you’ve saved gradually over time, not just gifted or borrowed at the last minute.

✅ What counts as genuine savings:

- Regular deposits into a savings account over 3 months or more

- Money sitting in your account untouched for 3+ months

- Rent payments (in some cases, with proof and good rental history)

🚫 What doesn’t count:

- Gifts from family (unless held for 3+ months)

- Tax refunds or one-off bonuses

- Borrowed money or loans

This shows the lender you’re financially responsible and can manage your money well, which is critical when borrowing with a 5% deposit.

🧠 What is Credit Scoring?

Every time you apply for a home loan, lenders assess your credit score, which is a number that reflects how well you’ve managed credit in the past.

Your score is based on things like:

- Your repayment history on credit cards, loans, and bills

- How much credit you’ve used

- How often you’ve applied for finance

- Any missed payments or defaults

A higher score can help you qualify for a better loan, while a lower score could mean more hurdles or higher interest rates.

⚠️ How Do Personal Loans & Buy Now Pay Later Affect You?

Personal loans and BNPL services (like Afterpay, Zip, Klarna) may seem harmless, but they can seriously impact your home loan application.

📉 Personal Loans:

- Increase your total debt

- Raise your monthly commitments (reducing how much you can borrow)

- Lower your credit score if you miss repayments or have too many loans

⚠️ Buy Now Pay Later:

- Many lenders treat BNPL like a line of credit

- Frequent use shows risky spending behaviour

- Can reduce your borrowing power or even lead to loan decline

✅ What Can You Do?

- Start saving a regular amount each payday since consistency counts

- Keep your accounts tidy without late payments

- Limit new credit applications

- Be cautious with BNPL and use it sparingly or not at all if planning to buy

🏠 Let’s Make Your First Home Happen

At Personalised Finance, we guide you through the home loan process from day one. We’ll help you understand lender requirements, build your genuine savings, and get your credit profile in the best shape for approval.

📞 Chat with Hendy today to take the first step toward your new home without stress.