Proof of Deposit not been asked for

jollymolly_2

Hi,

We have had a mortgage offer and have just signed all the paperwork ie contract and plan, and sent them over to our solicitor. We have not yet been asked for proof of deposit, just wondering if it is always required? What is the next stage? Thanks in advance!

holly_hobby

If your solicitor is also dealing with the sale of your current property - and the deposit is coming from this, there is already a clear audit trail of the monies.

If however, you are FTB or don't have a property to sell - POD will be requested (in accordance with money laundering regs)

If you are at all unsure - just give your Sol a quick call, he should be happy to answer any queries or concerns you may have about this, and the whole conveyencing process.

Holly

jollymolly_2

Thanks for getting back to me. Who is the proof of deposit for? Solicitor or bank? Also, we have £20,000 deposit, £10,000 we saved ourselves and £10,000 was a gift from a relative. We can get proof of this but is this likely to slow down the process? Worried about being homeless for a while as we are in rented at the moment and have to be out by the 9th Sept for the next tenant to move in!

holly_hobby

The proof of deposit is really reqd by the Solicitor, in that he has ensured that the transaction as a whole has met Money Laudering regs. (the lender will also want to know, in order to establish who is providing the depost)

Accordingly, I presume your own 10k will be proven by a bank/b society statement.

The 10k gift requires declaraton to the lender (have you done this ?), who may require a signed disclaimer confirming that the monies are an absolute gift i.e not provided with future repayment to the donor.

Which is why lenders want to know the source of deposits.

If you haven't disclosed the gifted deposit, I suggest you do so asap, as failure to do so may have an adverse effect on your mge application upon its discovery. (i.e some lenders do not accept gifted deposits, and/or will make adjustments regarding the capital deposit to come directly from the purchasers funds)

Speak to your mge broker or adviser to ensure that your application has followed correct formalities and rules of disclosure in this matter.

Hope this helps

Holly

DVardysShadow

holly_hobby wrote: »

The 10k gift requires declaraton to the lender (have you done this ?), who may require a signed disclaimer confirming that the monies are an absolute gift i.e not provided with future repayment to the donor.

As the £10k is already in OP's possession, arguably it is his own money and can be declared as such. Only if the money is yet to be handed over does the whole gift thing need to be raised.

Discussed here recently, but before you turned up IIRC. There are divergent views on this - I don't want to reopen the discussion, but I do think the other view needs stating.

holly_hobby

They already have 10k savings .. and another 10k as a gift = 20k deposit.

Commenting on your post, I would just reiterate that if the lender asks for the source of your deposit (whether its already sitting in you bank or not), you must disclose if any part of it is a gift (the lender will want confirmation that it is an absolute gift i.e the donor does not require repayment or any interest in the property).

To do otherwise would make the applicant guilty of non-disclosure, with its own ramifications. (but I do speak from a professional stand point).

Of course I am sure that many applicants choose not to disclose this to their brokers/advisers - I can only give advice on how compliant mortgage advice and processing should be performed.

By the way I have absolutely no idea what IIRC means ? Is that forum jargon for a newbie ?

Holly

m00m00

IIRC = If I recall correctly

holly_hobby

m00m00 wrote: »

IIRC = If I recall correctly

Ah .. I see ... thanks for the translation I shall remember that for next time .... :T

Holly x

DVardysShadow

holly_hobby wrote: »

They already have 10k savings .. and another 10k as a gift = 20k deposit.

Commenting on your post, I would just reiterate that if the lender asks for the source of your deposit (whether its already sitting in you bank or not), you must disclose if any part of it is a gift (the lender will want confirmation that it is an absolute gift i.e the donor does not require repayment or any interest in the property).

To do otherwise would make the applicant guilty of non-disclosure, with its own ramifications. (but I do speak from a professional stand point).

Of course I am sure that many applicants choose not to disclose this to their brokers/advisers - I can only give advice on how compliant mortgage advice and processing should be performed.

By the way I have absolutely no idea what IIRC means ? Is that forum jargon for a newbie ?

Holly

The argument has been had. There were divergent views.

If the gift goes from the giver to the buyer's solicitor, then I think that there are legitimate reasons to be asking whether the gift is a gift without reservation.

If the borrower tells the advisor that any part of the money was a gift, then questions should be asked to establish whether the money was given without reservation.

But if the borrower has been given the money without reservation, then if they are confident it really is their money, they can honestly answer that they are providing the balance from their own funds. That would be a totally truthful answer - and they should not be terrified into having to get the giver to sign a load of stuff.

Of course, if the question is "Was any of the money a gift", then this should be disclosed.

holly_hobby

DVardysShadow wrote: »

The argument has been had. There were divergent views.

If the gift goes from the giver to the buyer's solicitor, then I think that there are legitimate reasons to be asking whether the gift is a gift without reservation.

That would be a gift from the "Donor" to the Sol, whereby just because it goes straight to the solicitior, does not in itself mean its made either 'with' or 'without' reservation - its just been paid directly. The terms under which the donation has been made, is a seperate issue to whom directly recd the funds.

I provided comment to the OPs question - no idea of any previous thread so can not comment on the validity of what was discussed within it.

DVardysShadow wrote: »

If the borrower tells the
advisor that any part of the money was a gift, then questions should be asked to establish whether the money was given without reservation.

If the lender requires details of the source of deposit ie is any part gifted. Its not really for the broker to decide whether, in their opinion, they believe its an absolute gift or not. It is a matter for the lender, to make their own enquiries and obtain a legal disclaimer signed by the Donor if reqd.

The applicant advising the broker of the gift, means that if the lenders criteria requests confirmation of deposit source, the broker ensures the info is divulged.

DVardysShadow wrote: »

But if the borrower has been given the money without reservation, then if they are confident it really is their money, they can honestly answer that they are providing the balance from their own funds. That would be a totally truthful answer - and they should not be terrified into having to get the giver to sign a load of stuff.

Its not the applicant getting the DONOR to sign "a load of stuff" aka a 'disclaimer' - its the mge lender who may require such a disclaimer. (unless of course the Donee also has such a requirement).

I can see why you believe your point to be correct - but the donated funds have not been accumulated from the applicants ability to save/prudent financial management - which is the whole basis of why some lenders want to know the sources of deposit.

To clarify - a lender asks the source of deposit to determine how much of it the applicant has saved (indicating a responsible attitude to financial affairs) and to also assess the applicants OWN financial exposure as part of the property purchase.

The belief being that the higher the level of capital contribution by the applicant, the less likely they are to later mis-manage their mge/fall into respossession waters.

The lenders take this approach, as it could be argued that the applicant would see any donated capital as "disposable", in so much as that it is not (entirely if part funded)their own capital they have saved that may be lost as a result of a possession order.

For example - this is why lenders will not accept the sole source of deposit being entirely from a gifted deposit (builder, vendor or family) - as this effectivly gives the applicant a 100% mge (with no capital input of their own), and therefore no percieved risk of loss. (notwithstanding any capital reduction on C&I, or mge payments made)

And why the lender may in the event of any gifted deposit (vendor now obsolete), adjust the level of deposit to be sorced form the applicants own personal funds, to ensure that the std amount of minimum deposit i.e 5% or whatever, is derived from their own funds.

DVardysShadow wrote: »

Of course, if the question is "Was any of the money a gift", then this should be disclosed.

Well yes .. because as stated in my earlier thread, to conceal this fact would be at best non-disclosure, in reality mortgage fraud.

Holly

thor

Is proof of deposit another pointless exercise brought in by the money laundering regulations? or do you have to explain where money sitting in your bank account came from? If this is the case then surely there are a huge number of ways to fudge the explanation?