Paying house deposit to solicitor - will they check source of funds at time of paying

newbieFTB

I'm in the process of buying a house, can a relative transfer some of the money for my deposit to me (in the form of a very short term loan) to enable me to pay the deposit while I sort out access to my own funds?

I've already provided proof of deposit to the solicitor/mortgage company in the form of regular monthly savings from my salary into: premium bonds, a savings account and an Help to Buy ISA. If a relative loans me part of the deposit, the full deposit will come from my current account but part of it will have been paid into to my savings from a relative, and then transferred from my savings account to my current account to pay the deposit.

Not sure if the short term loan from a relative would be acceptable as I've declared the deposit is coming from personal savings? Obviously don't want to do anything dodgy and more so don't want to cause any delays if they do check at the point of exchange and it suddenly falls into the realms of gifted deposit.


Reasons for me wanting to do so are below...

As I understand when everybody is ready to exchange the solicitor will ask for the 10% deposit, I've already transferred the premium bonds into my bank account in readiness but to access the Nationwide savings I'll need to go into branch with my passbook and they'll close the account and give me a cheque which I can pay into my current account with a different bank (I don't hold any other accounts with Nationwide), this will obviously take the usual length of time to clear into my bank account (5 working days according to the website) and will therefore delay exchange.

I don't want to close either the Help to Buy ISA (not using this for the deposit as I'm not eligible for the bonus on this purchase as house is over 250k) or the Nationwide Save to buy account, as if for any reason the sale fell through just prior to exchange I then wouldn't be able to use the benefits of those accounts - 25% government bonus on the HTB ISA and higher level of cashback (£1500) on the Nationwide Save to buy savings account - on a future purchase. Even if I did close the Nationwide savings when we're all ready to exchange it will still take 5 working days to get access to the cleared funds from the cheque.

G_M

Post 7 of your previous thread:

I assume that at some point during the conveyancing process your conveyancer (or the lender's solicitor if you are doing your own conveyancing?) will want to check your source of finance for moneylaundering purposes etc.

You will show him your account details and Bond holdings etc, and he will be satisfied.

Thereafter he will not really care, or know, about the precise source of funds. As Exchange approaches, he will ask you to transfer £X to his account in readiness for Exchange.

https://forums.moneysavingexpert.com/discussion/comment/72588395#Comment_72588395

newbieFTB

G_M wrote: »

Post 7 of your previous thread:



https://forums.moneysavingexpert.com/discussion/comment/72588395#Comment_72588395

Thanks G_M, I was seeking clarification on whether a check is done at the point of actual transfer - perhaps from someone who has been in a similar situation recently.

Edit: Since that post I've also discovered part withdrawals aren't allowed on this particular account either, the previous thought was to chance it and transfer just what was needed for the deposit so the account would still be open and I could transfer it back in and use the incentives on another purchase if this one fell through - that's not an option according to teh lady I spoke to in the branch today.

G_M

newbieFTB wrote: »

.. I was seeking clarification on whether a check is done at the point of actual transfer - perhaps from someone who has been in a similar situation recently.

Ah well hopefully someone will be along soon.

ellie27

Our solicitor wanted proof of funds a month or so before we exchanged. I had already received the money I got from in-laws so he said that was fine.

davidmcn

newbieFTB wrote: »

Thanks G_M, I was seeking clarification on whether a check is done at the point of actual transfer - perhaps from someone who has been in a similar situation recently.

Yes, they need to know the source of the money you've actually paid to them, so if they're doing their job properly will want a paper trail showing the bank transfers.

newbieFTB

G_M wrote: »

Ah well hopefully someone will be along soon.

Thanks for the bump G_M!

ellie27 wrote: »

Our solicitor wanted proof of funds a month or so before we exchanged. I had already received the money I got from in-laws so he said that was fine.

Thanks, I already declared and proved my funds as personal savings so if they do ask again it would appear to be a gifted deposit with all teh kerfuffle that brings!

davidmcn wrote: »

Yes, they need to know the source of the money you've actually paid to them, so if they're doing their job properly will want a paper trail showing the bank transfers.

Cheers davidmcn, looks like I'll just have to bite the bullet and close the account early - I'm hopeful there's only a very small chance of it falling through prior to exchange but you never know.

Invalid_Username

It's not a gifted deposit as you're expected to pay it back. If the bank find out part of your deposit is loaned to you and you haven't told them they could withdraw your mortgage offer.

Borrowing for the deposit isn't popular with lenders. Even if it's from family, the fact you have to pay it back changes your situation unless you declares it in the first place.

Your solicitor works for you and the bank here. They have a duty to both. They have to ensure there's no money laundering etc and may want to discuss or see proof as to where the funds have come from. If they see something that doesn't look right or differs to what you've claimed they may inform the bank who in turn may pull your offer. If they do this after exchange it leaves you in a sticky position that could get expensive for you if you fail to complete on time.

newbieFTB

Thanks invalid username, I've worked out a solution now... I opened a new Nationwide savings account that allows transfers to a nominated external account (ie my current account). So I can just do an instant transfer from the savings account where my money is into the new savings account, then an instant transfer to my current account - no need to wait 5 days for a counter cheque to clear!

Clairabella

Not sure if in keeping your help to buy ISA will pay out the 25% when you do come to use it as it will not be for your first house. I might not be correct.

newbieFTB

Clairabella wrote: »

Not sure if in keeping your help to buy ISA will pay out the 25% when you do come to use it as it will not be for your first house. I might not be correct.

I won't get the government 25% bonus as although I'm a FTB the house I'm buying is more than 250k. The interest rate is 3.5% though so I'd rather keep using that account to get the decent rate.