Scrutiny of my deposit for mortgage

Iwant2boptimistic

It's been a long time since I applied for a mortgage. My mortgage adviser says he needs proof of my deposit for my BTL. I didn't anticipate this as I thought I didn't need my deposit until exchange. I need to know how I can get myself best prepared for the scrutiny/questions this is going to cause now. My sister owes me in excess of £60000 and she has an insurance policy which will pay out in 4 weeks time so she's going to get it paid straight into my Halifax bank account. This is the money I will use for the deposit on my BTL. It will be paid from an insurance company into my account. Could someone who has expertise in this area explain why they want proof of my deposit and what they're looking for and what I need to be able to show them that I'm telling the truth? I've lent my sis money which began in 1992 and we always had an agreement that I would wait a very long time for the money. It's been for cars, household items, a few holidays every year, overseas education experiences for her kids etc. It's been for many reasons over many years and it's always been my desire to do this for her and her children and I will continue to do it with cars and university and deposits for the kids first house when they get to that age. So what do I need to do ? Do I need to get her to sign an affidavit etc? My will is all made out to her and the kids as I've no spouse or children of my own. They are my only family and they have supported me in ways other than money. If it means I'm not going to be able to get through this hurdle then it probably is fairer to my vendor to find out now rather than later as I've just got my agreement in principle and would feel terrible if I had to pull out at the end and cause no end of distress for the family who's house I'm buying. TIA.

kingstreet

They want to see where the deposit is coming from. It's a standard money laundering requirement.

If you provide a letter setting out the relevant sources, they'll probably accept confirmation of payment letters and statements when the money arrives.

Speak to your adviser if it is their request.

Crashandburn

Good thing is the money is coming from an immediate family member so lenders could accept it as a gifted deposit from your sister as proving it to be repayment of a 20 year old debt might be hard work.

A simple letter from her confirming the gift, that its not repayable and she'll have no interest in the property will do the job.

kingstreet

Do you think this is a lender requirement, or just the broker completing his file?

I was reading something similar on Cherry yesterday.

Thrugelmir

Solicitor will require verification for money laundering purposes. Also under Insolvency Act creditors of the donor are able to recover their funds.

Large sums gifted will envitably receive close scrutiny. As it's the lenders money at risk too.

Iwant2boptimistic

kingstreet wrote: »

Do you think this is a lender requirement, or just the broker completing his file?

I was reading something similar on Cherry yesterday.

My mortgage broker rang me this morning to tell me that the approval in principle had come down to him today so he would now fill in a full application and submit that. He said he'll visit me again early next week to sign me up for my life insurance "and to get anything else I might need" then mumbles " they might need proof of deposit" so I took "they" to mean that the lender will need proof of deposit. The mortgage adviser has taken copies of my passport and payslip and payment for the survey fee. The estate agent wants a copy of my passport too so they can send out a memorandum of sale and also the solicitor has asked for a copy of my passport too.
Kingstreet - I'm not sure who or what Cherry is so would you mind explaining please ? I can also see you are a mortgage adviser so what is acceptable to you from your clients as proof of deposit? Thanks so much everyone.

Iwant2boptimistic

Crashandburn wrote: »

Good thing is the money is coming from an immediate family member so lenders could accept it as a gifted deposit from your sister as proving it to be repayment of a 20 year old debt might be hard work.

A simple letter from her confirming the gift, that its not repayable and she'll have no interest in the property will do the job.

Thnx for the reply. Have you been able to accept that type of letter from your client and its been accepted? I have files and files and files (huge files !) of record keeping of all the money I've lent her. It's all amicable. Thanks.

Dave_Ham

I would suggest a letter from her confirming the gift status will be sufficient.

It is unlikely they will request a rationale as why, but dependent upon the lender of course.

If you are buying this place as an investment, with no dependents you need to consider if life insurance is essential for you?

Good luck

Thrugelmir

How much is the gift?

Crashandburn

Iwant2boptimistic wrote: »

Thnx for the reply. Have you been able to accept that type of letter from your client and its been accepted? I have files and files and files (huge files !) of record keeping of all the money I've lent her. It's all amicable. Thanks.

That's the format the lenders request for a gifted letter. Solicitor will do the money laundering aspect of the source of funds but some underwriters like to see details of it before agreeing the mortgage ie Santander

Thrugelmir

Iwant2boptimistic wrote: »

Thnx for the reply. Have you been able to accept that type of letter from your client and its been accepted? I have files and files and files (huge files !) of record keeping of all the money I've lent her. It's all amicable. Thanks.

Unfortunately does not provide any evidence as to the source of funds or the fact that your sister is in a financial position to repay you the informal loan you made either.