Deposit sources?

M789

Hello

I am in the process of purchasing a property and my original source for my deposit may have fallen through. I am currently trying to work on a way to raise another deposit option & had the idea of selling my car which should be worth around 10-12k.

I ran this idea by my Conveyancer today and was told that the ONLY way that this would be accepted, would be if I sold my BMW to a garage or a “we buy any car” type company, so there could be an audit trail. My conveyancer actually suggested that I should ask the potential buyer for my vehicle, to gift me the money they pay for my car and sign paper work relating to my mortgage! Which just sounds ludicrous, complicated and dishonest!

I am not a criminal or a money launderer so why am I being treated as one? Why can’t I just sell my OWN car that I worked hard to buy to put towards my deposit?

I am not keen on selling my car to one of those “we buy any car” type companies as they are known for ripping people off.

I am convinced that she must be wrong as I cannot see a problem.

Is she correct with her advice? Would I not be allowed to sell my car privately and use the funds towards my house deposit? I would be very grateful if you guys could shed some light on this.

daisyfrau

I have only been through three house-buying transactions myself so I will defer to someone more experienced, but my understanding is that under anti-money laundering legislation the banks do have the right & duty to look into where the deposit came from. With gifted deposits (eg parents) my understanding is the givers have to sign paperwork indicating they have freely given the money, know what purpose it is being used for, and have no lingering claims on the money (ie it is not a loan - which generally can’t be used for a deposit).
In practice, I would be surprised if they had audited your deposit - for which selling your car to raise it is, as you say, perfectly legitimate. Unless you had declared one source on your paperwork and are now needing to change the source? In this case I think your broker is partly right - having a clear paper trail for the purchase with contact details of the purchaser might be needed at this point (although you might reasonably have done this anyway?), bit the money would probably seem more ‘legitimate’ if you sold through an established business (although as you say that’s not ideal) rather than scribbling something on a piece of paper with a buyer (which - let’s face it -could easily be faked).

But as I say, I’ll wait for someone more knowledgeable to come along and correct me if I’m wrong.

I suppose the question I have is why you told your broker of the change in the first place? What had you said your original source of your deposit was? Generally speaking - most people’s deposits come from ‘savings’ - if you had sold your car and parked it in your acct I can’t see how they would have known the difference. I didn’t go into the details of the facto. Was doing loads of overtime to fund my deposit - ultimately savings are savings. That said if I had been audited I had a very legitimate paper trail via my pay slips and bank statements as to where the money had come from...

Just a thought: It may be worth taking some time to reconsider the purchase at this moment in time anyway, given such a drastic change in circumstances. Will you not need your car for work, etc or is it a second car?

ACG

I can see why your solicitor may want it sold to a reputable company rather than an individual but beyond that, it sounds like they are talking rubbish and as you say, would be illegal/fraud.

You can sell your car to anyone, even something like ebay should be sufficient I would imagine. The issue is that the lender will need to check any alterations with the lender directly.

So to get the right answer for the lender you have applied to, you need to check with the lender. You could call up generically and explain you are selling your car and will be receiving the money from a garage/unknown person etc and see what they say. Remember to take the persons name and the time of the call to refer back to if needed.

davidmcn

M789 wrote: »

My conveyancer actually suggested that I should ask the potential buyer for my vehicle, to gift me the money they pay for my car and sign paper work relating to my mortgage! Which just sounds ludicrous, complicated and dishonest!

I would agree with that

I am not a criminal or a money launderer so why am I being treated as one?

Unfortunately the regulations require the solicitors to assume you might be until proved otherwise.

Would I not be allowed to sell my car privately and use the funds towards my house deposit?

What method of payment would you be using and how would you be evidencing the sale? If you're selling privately in the traditional way and getting a wodge of folding money which you then pay into your bank, the solicitors will probably run a mile. I can understand why they'd prefer evidence of a sale to a reputable dealer rather than a random individual.

ACG wrote: »

You could call up generically and explain you are selling your car and will be receiving the money from a garage/unknown person etc and see what they say.

No, I think this is all about the solicitors' compliance with the anti-money-laundering regulations rather than anything to do with the lender (though obviously they would have to run it past the lender if they identified that a third party was actually contributing to the price).

amnblog

Each solicitor will decide for themselves what they will and will not accept as proof of deposit.

Their registration is on the line and if they want to be picky, they will be.

ACG

davidmcn wrote: »

No, I think this is all about the solicitors' compliance with the anti-money-laundering regulations rather than anything to do with the lender (though obviously they would have to run it past the lender if they identified that a third party was actually contributing to the price).

In that case, that is easily rectified.
Transfer your searches to a new solicitor. You may lose £100 or so, but if they want to come up with a load of rules recommending you lie or who you can sell your car to, I am pretty sure you would be able to walk away without incurring too many costs if you forward that email on to the owner of the business stating how unhappy you are.