Where can my mortgage deposit come from?
Every property buyer and mortgage borrower is now asked where their mortgage deposit is coming from by the mortgage lenders. A deposit source is a very important factor for beginning a property purchase.
This is not because they are nitpicky but by law, the mortgage brokers and solicitors have to find out where the mortgage deposits are coming from.
Proof of deposit could be in your personal savings account, bank accounts, multiple bank accounts, exchange deposit, gifted deposit by a family member or cash deposit. Your mortgage advisor will suggest the best proof of deposit.
To ensure that deposits come from legal sources, the constitute financial advice has strict anti-money laundering regulations and guidelines.
It is important to know where your proof of deposit came from in order to make a mortgage decision.
Each mortgage advisor will accept deposits from different sources.
To avoid getting placed with the wrong lender, your advisor should be aware of this information from the beginning. Personal savings is the most straightforward proof of deposit.
The information below shows the most popular mortgage deposit sources that are currently accepted by UK lenders.
Deposit sources acceptable for mortgages
Personal savings and investments, this is a good deal for all lenders, but some lenders may be more strict and want to see proof of an increasing balance.
Gift – Gifts must be from family members (parents or grandparents, siblings or uncles or aunts, stepparents, etc.).
However, in some cases, one or more lenders may accept a gift from someone other than a relative (such as a family friend or another explainable source).
Gifts from third parties are not acceptable due to the possibility of money laundering or fraud. Due diligence checks are usually performed to verify the source of the funds. Sometimes ID verification checks may be necessary.
Inheritance is accepted by most lenders without any problems. Property sale most of the time is not a problem as long as the proceeds from the property aren’t being charged to anyone else. They must have sufficient funds to pay for the completion.
Other assets may be sold. You can use other assets, such as boats, cars, valuable memorabilia and artwork, as a deposit with most lenders. There is a problem when money laundering is suspected.
Lenders, advisors and solicitors are required to verify that all funds come from legitimate sources.
Unsecured borrowing can be credit cards, personal loans, and other forms of unsecured borrowing.
Most lenders will not accept them as a way to raise deposits. It is acceptable by a few lenders, but not all.
Bridging finance allows customers to borrow very short-term money for very short periods. This arrangement is expensive with rates between 1-3% per month. A 100k loan is a 2k monthly payment at 2%. ).
Gambling wins, this is a risky business. If gambling is a regular occurrence, lenders might have a problem with this.
Lenders have been known to look at bank statements and subtract regular gambling withdrawals from monthly obligations.
This can impact affordability and even affect your ability to win. However, providers may offer you a mortgage based on your gambling income.
Withdraw money from abroad, Lenders find this tricky because it is difficult to track the source of cash to ensure it is legitimate.
Many lenders may decline your application. However, some lenders are flexible and will accept overseas deposits provided that the money is in an established bank account and can be traced back to a legitimate source. It is on a case-by-case basis.
Now you know where your mortgage deposit can come from!
Get in touch with us if you have any questions or want to find out which lenders will accept your application.