From tenant to home owner

If you’re like many Australians who currently rent but would one day like to own their own home, you’re not alone. With interest rates and property prices still low, you might already be asking if you qualify as a buyer, and what lenders look for.

Rental history and payments are considered as good savings history by some lenders. This can qualify for 5% genuine savings when applying for a home loan, but you will still need to provide the balance of a deposit from other means, such as a gift, inheritance, the first home owners grant or other savings.

When reviewing a renter’s application, lenders will also look for: At least 6 - 12 months of continuous rental history in the same property (without default). The property lease must be managed by a licensed property manager/agent; and tenants on the lease must be the same as those on the loan application.

The maximum LVR (loan to value ratio) that a lender will approve using rental history as genuine savings is 95%, with lenders mortgage insurance being additional. Lenders mortgage insurance will not be required if your deposit is 20% of the purchase price, or more. Again, not all lenders will accept rental history as genuine savings, which is why it’s important to seek the advice of a mortgage broker. A broker has access to multiple lenders and can help determine which lenders are more likely to process an application from a tenant who wants to use their rental history as genuine savings.

Any questions on moving from tenant to property owner, please give us an obligation free call.