Evidence of "unencumbered" deposit

audigex

For my mortgage application I have to provide evidence of an unencumbered deposit: what does that mean, precisely?

My "deposit" is a little over 25% of the value of the house, of which 10% of the total is cash and 15% is equity from the house itself, as I'm buying my mother's house.

That 10% is currently invested in a trust fund (although I've no idea whether it's still technically a trust fund as I transferred the investments to my name 5 years ago). I can access it any time and am currently removing it, but it's not in my bank account ready to buy the house this instant.

That said, it will be available and in my bank within 3 weeks or so (depending on how fast the company are), before the mortgage application completes.

Do I need to have these funds in my bank account before I can apply for the mortgage? Or is it acceptable that they can be easily accessed and are currently being withdrawn? And how do I prove it to the mortgage company either way?

amnblog

If you expect to be buying the house from mum using some of the equity as deposit - make sure you have the right lender.


Particularly if mum is not moving out.


I expect 'unencumbered deposit' to be a stupid way of saying suitable funds.

audigex

The right lender? Do you mean that some offer especially good deals for this, or just that some will cause problems?

The lender is aware of the situation and where the equity is coming from, and mum will be moving out immediately (or within a month or two at most, depending on how fast her own house purchase goes through)

Edit: got a chance to call the lender, they basically want evidence that I have the money available, eg the latest statement. No idea why they couldn't just say that, but oh well....

amnblog

audigex wrote: »

mum will be moving out immediately


or within a month or two at most, depending on how fast her own house purchase goes through

Guess which sentence should not be used?

audigex

Noted, thanks

The plan is definitely for immediately: is there a particular reason they'd care? Or is it because it blurs the line between ownership and could appear to be me taking out a loan against her house and transferring ownership etc? eg it's just messy?

Worst case she can live with my sister for a month or two while her place gets sorted.

amnblog

Mention your mum is staying for the moment and see how you get on!!

audigex

Well hopefully she wouldn't be: the plan is to have her house lined up by the time my mortgage comes through (she's mortgage free, so basically as soon as I can complete, she can, assuming no other issues).

If there's any risk of issues, though, we'll just change the backup plan from "You can stay at mine until yours completes" to "You can stay at my sister's until yours completes".... she's got more rooms than me anyway

TrickyDicky101

audigex wrote: »

The plan is definitely for immediately: is there a particular reason they'd care?

Having previously lived there and selling at undervalue your mother *could* continue to have a beneficial interest within the property which could hinder the lender's attempts to repossess and sell the property in the event of you not making the agreed repayments.