Mortgage - Proof of how a deposit was saved

nlong

We are in the process of buying our first house,

The mortgage application is being made through a financial advisor, the mortgage provider requested proof of deposit ,which we see as a reasonable request, and have provided to them.

They have now asked for proof of how this deposit was saved. e.g. regular monthly saving (which we have done).

It makes no sense why they are requesting this (what difference would it make if we had the money in seperate accounts and chose to pay bulk amounts into our deposit account to have the money in one place??)

Has anybody else come across this with Santander/Alliance & Leicester??

Thrugelmir

They are merely confirming that the deposit is actual cash and not been "created" by an artificial means.

People will resort to any measure if they need to.

Leon_W

As soon as I saw the heading I knew it was going to be a Santander problem !

They really are a bunch of cretins with quite the worst underwriting to be found anywhere. The only suggestions I would make is not to have gone to them in the first place and secondly, have a good backup plan.

I also agree with you, having to prove the manner in which you saved your deposit is going one step too far but it seems they regularly ask for this.

nervousftb_3

it is to check that you really have 'saved' this money yourself, rather than have a mysterious deposit land in your account from somewhere!

Thrugelmir

Leon_W wrote: »

As soon as I saw the heading I knew it was going to be a Santander problem !

They really are a bunch of cretins with quite the worst underwriting to be found anywhere. The only suggestions I would make is not to have gone to them in the first place and secondly, have a good backup plan.

I also agree with you, having to prove the manner in which you saved your deposit is going one step too far but it seems they regularly ask for this.

From a mortgage broker this is a very odd reaction. There is nothing abnormal in this request from an underwriters point of view.

rl290

This strikes me as a very GOOD idea. See my post here (http://forums.moneysavingexpert.com/showpost.html?p=31668495&postcount=32) for reasons.

Being able to save for a deposit is a wonderful indicator to a bank that you are financial suitable to give a mortgage to: you have enough income to save, and are organised enough to actual save it rather than spend it. However, the bank needs to be sure that you really did save it yourselves and that it wasn't a "gift" or inheritance from elsewhere. Otherwise, even if you have the income to pay off a mortgage, there would still be no evidence that you are able to plan or budget every month effectively.

R

LeeSouthEast

A mortgage advisor saying Santander are cretins.. thanks! I know who definitely to avoid now

Ditto

When I bought my house (Jan/Feb '10) the solicitor wanted to see statements etc to see how I had saved my deposit. She said, also there was a large sign on the wall, that the government made a ruling that they had to check because of money laundering etc.

Seemed a reasonable request to me.

Btw I'm with Nationwide and they didn't ask for proof, even though my money was saved in another bank.

VIGILANT22

Thrugelmir wrote: »

They are merely confirming that the deposit is actual cash and not been "created" by an artificial means.

People will resort to any measure if they need to.

I am glad that lenders are being "SAVVY" enough to do this now...hopefully we this will discourage "people/advisers" recommending a loan..............

luckyfool

rl290 wrote: »

This strikes me as a very GOOD idea. See my post here (http://forums.moneysavingexpert.com/showpost.html?p=31668495&postcount=32) for reasons.

Being able to save for a deposit is a wonderful indicator to a bank that you are financial suitable to give a mortgage to: you have enough income to save, and are organised enough to actual save it rather than spend it. However, the bank needs to be sure that you really did save it yourselves and that it wasn't a "gift" or inheritance from elsewhere. Otherwise, even if you have the income to pay off a mortgage, there would still be no evidence that you are able to plan or budget every month effectively.

R

True to a point. But ultimately they don't care if they saved it monthly or if it was a gift. They just want the client to prove that it was saved from their own resources, or that if it was a gift then they should declare it as a gift and fulfil their gifted deposit criteria. i.e. Typically they will want a letter from the person giving the money confirming that it's a gift/not a loan, not repayable, and they will have no interest in the property.

Of course their other interest is in fulfilling their money laundering obligations to make cursory checks that the money is not the proceeds of crime. e.g. 21 yr old first time buyer with a £50k deposit then any lender would ask questions about where it came from. Saving it monthly would seem unrealistic so they would expect it to have been a family gift or inheritance or something along those lines. On the other hand a 30 yr old next time buyer with a 100-200k deposit coming from the sale of a previous property a lender is not going to bat an eyelid and is not going to ask for bank statements to prove deposit in that scenario (they would expect the solicitor to do any ML checks and confirm the source of funds). edit : To clarify, when I say "confirm source of funds", I mean the solicitor would satisfy themselves that the stated source of funds is genuine through requiring evidence where necessary. i.e. if they are acting in the sale of the applicants previous property and the deposit comes from those proceeds then that is them satisfied. In this context I use the phrase as a term of art, obviously the lender and broker confirms the source of funds in the sense that they ask the applicant on their factfind /and or application form what the source of deposit is. Where there are concerns about the deposit the broker and lender have a responsibility to ask the applicant to evidence the source

VIGILANT22

Quote: (they would expect the solicitor to do any ML checks and confirm the source of funds).

Hmmm........Doesn't your compliance dept ask the same question on your Fact Find or is it a tick box exercise where you don't have to demonstrate?