Deposit Declaration

Moogu

Hi there, I’m a newbie to the forum. Have just started the process of (hopefully) buying first house, along with my husband. 

Wondering if any of you can help with a query…
We are filling out paperwork for the solicitor, specifically the source of funds and wealth questionnaire.
So here’s the query - do we have to declare that a small amount of our 5% deposit has come from a personal loan that was taken out a number of months ago, for the purpose of debt consolidation?

One mortgage advisor said that if it’s 3 months or more then ‘nobody will cate where the deposit money came from & we won’t have to say anything’ - is this correct?
Thanks.

user1977

It's not a problem from the point of view of the solicitor, but more likely to be of concern to the lender as they tend not to like deposits which have themselves been borrowed. How far have you got with your mortgage application?

Moogu

We haven’t applied yet, but probably looking to apply next month. Buying a new build which won’t be ready until April 2022.

MaryNB

I disagree with the 3 months comment. I had to go back A LOT further with proof of my deposit (particularly a lump sum I got as a gift).  My solicitor seemed a bit over the top compared to what others have said on this forum but there's nothing stopping your solicitor going back further than three months. They need to satisfy themselves and the lender that your funds adhere to the T&Cs of the mortgage. They may only require 3 months worth of bank statement but there's no guarantee they won't ask for more. If your solicitor thinks you're being evasive it may not end well...

AnotherJoe

Moogu said:

Hi there, I’m a newbie to the forum. Have just started the process of (hopefully) buying first house, along with my husband. 

Wondering if any of you can help with a query…
We are filling out paperwork for the solicitor, specifically the source of funds and wealth questionnaire.
So here’s the query - do we have to declare that a small amount of our 5% deposit has come from a personal loan that was taken out a number of months ago, for the purpose of debt consolidation?

One mortgage advisor said that if it’s 3 months or more then ‘nobody will cate where the deposit money came from & we won’t have to say anything’ - is this correct?
Thanks.

Money is fungible.

So, who's  to say that the small amount of your 5% came from a loan ?

How do you know it didnt come from savings? The loan was used to pay off other things whilst savings went into the deposit.

However .... do you still have that loan? That might be more of an issue, the fact that you have a loan, which incurs monthly payments (presumably)

Are you using a mortgage broker? They can advise on the best way to answer questions. 

 

user1977

MaryNB said:

I disagree with the 3 months comment. I had to go back A LOT further with proof of my deposit (particularly a lump sum I got as a gift).  My solicitor seemed a bit over the top compared to what others have said on this forum but there's nothing stopping your solicitor going back further than three months. They need to satisfy themselves and the lender that your funds are adhere to the T&Cs of the mortgage. They may only require 3 months worth of bank statement but there's no guarantee they won't ask for more. If your solicitor thinks you're being evasive it may not end well...

3 months is fairly normal. Nevertheless, even if they look back further, as I said above this isn't a problem from an anti-money-laundering point of view (assuming it's a loan from a recognised lender and not Barry the Loanshark), as the solicitor will happily tick the box to say they've verified where the money came from. The question is whether any ongoing liability to repay the loan upsets the mortgage lender's sums.

JS21

How much is the 'small amount of our 5% deposit'?
Do you still have the loan? are you paying any interest on this loan?
Was the loan from a recognised lender?
The solicitor may be ok with going back three months but the lender may ask for proof of savings going back further - both our solicitor and lender asked for 6m + worth of statements as we had received a small gift amount which we are using towards the deposit. 

If you're using a mortgage broker they'll be able to advise.