Mortgage from Overseas Savings

tichonus

Hi All,

Currently applying for a mortgage. It's a singular application through me, however my gf will be living with me also.

For the mortgage, we chose 10% deposit (£10500) and it comes with around 8.1k from overseas (Passbook with the german bank "sparkasse") and the rest from savings in my current account.

The passbook doesn't show where transactions came in from, but it shows how much and when.

As it is a german passbook, you can not withdraw and directly pay into an account. They will give you that lump summ in cash and expect you to deposit it yourself.

My question is, as obviously most banks dont accept cash deposits in foreign currency, if is okay, if my mother in law buys the currency off me for a 1:1 rate and I then deposit this into my account. Would this be sufficient proof of funds or are alarm bells going to ring?

I do have the original passbook and the money has been in there over years.

davidmcn

Converting it into cash at any point will ring alarm bells, yes. Is there really no other method of withdrawal than into folding cash e.g. cheques or similar?

tichonus

No, german banks are very odd in that regard. When I moved to the UK 6 years ago, they required me to close my current account with them, however It was fine to keep my passbook with them.

The problem is, you would need a current account with the bank to transfer the money. Due to only having the passbook, I had to withdraw in cash. Like I said, I have all the deposits and withdrawals in the passbook with me.

I could go to the postoffice and let them buy the euros, for an extortionate fee ( they were going to give me £7300 for 10000 Euros ) hence why we had the idea of my mother in law "buying" the currency of me. I.E I give her 10k in euro and she gives me 10k in pounds back.

(She goes on holiday like twice a year and always exchanges like 1k pounds every time so that suits her just fine)

[Deleted User]

Mortgage companies are generally fine with funds coming from overseas. If it can be seen that funds have been there for a decent length of time and maybe regular deposits then it will just show as savings. If the passbook has a lump sum then that may need a paper trail to show where it came from

Ultimately its a conversation to have with a solicitor as he/she will be the one to sign off money laundering checks.

I have had a case recently where the client sold romanian investments to her bank account, closed this down and gave cash to a 3rd party company who offered a decent exchange rate and transferred to UK and then back to the clients UK account. Sounded dodgy as hell when it was explained but out but the solicitor was really good as saying exactly what documentation they will need at each stage.

As long as you use a lender fine with overseas deposits, and a decent solicitor to talk you through the documentation requirements it shouldnt be a problem

davidmcn

You might be best to discuss with your mortgage broker/solicitor about what their requirements are. They might be satisfied if you can show the cash withdrawal from the passbook, but the preference would be for transfers directly between accounts rather than leaving opportunities for "dirty" money to be channelled in.

The other way of sidestepping it might be to declare a gifted deposit from your mother if she's already got £10k in her account (though if in reality she's only paying you because you're "gifting" her the Euros then it might be semi-fraudulent to claim it's a gift from her).

tichonus

Does it still count as overseas deposit once it's in my UK current account? I'm guessing a period of time will have had to pass?

[Deleted User]

In my experience it really wont matter since its EEA anyway. There are a few prickly lenders that want it in your UK account for 3 months before application but if you are with a prime lender then they are all generally fine with overseas money.

Majority of cases go back for 6 months on deposit but ive had cases go back as far as 3 years to try find the true source of money. Its not worth guessing what someone will want you to do as you may end up creating more of a mess iwth good intentioned actions

This is the kind of situation where I would just call a few lenders and talk it through and call the solicitor i have a good relationship with and get an opinion on where to go.

I dont think the source of your deposit will cause any issues with your ability to purchase a home in UK. It may just mean jumping through some hoops to show proof of where the money has come from