Cash buy with a homeowner loan

lee26g

Hello,
I am looking to buy a property that is ‘cash buy only’ for 200k. I am very familiar with this property and why it is being sold for cash only.
I have 80k in cash and I can get a homeowner loan on my existing property to cover the remainder and all tax and legal fees.
I have the homeowner loan approved already, I just need to draw down the funds within 6 months.
would I need to draw down this money to prove I have the cash to my solicitor and for money laundering checks? 
I was hoping to leave it until the last moment to avoid having the loan and the purchase falling through.
i understand that what I am doing is a little sneaky 😊 

Any help appreciated!

Lee

Doozergirl

It's not sneaky.  Lots of people
fund cash purchases by releasing equity elsewhere.  

I should think that your approval notice would suffice as proof that the cash can be raised.   They're not going to be that bothered unless there is competition for the house, in which case something with no delay at all will be preferable to them.  If you can get the money straight away then it's worth writing it all down in a formal offer.  

eddddy

It will be the Estate Agent (on behalf of the seller) who wants 'proof of funds' when your offer is accepted. The Estate Agent will then tell the seller what your 'financial position' is, and the seller will decide whether to accept your offer, whether to take the property off the market etc (but I suspect the seller will take the Estate Agent's opinion into account.)

So it's a case of persuading the Estate Agent and the seller that you're serious credible buyer - with funds available.


The Estate Agent and your Solicitor should also do money laundering checks - the Estate Agent might be a bit lax, but the Solicitor is likely to be very thorough.

If you're borrowing the money from a reputable, regulated lender - I doubt there will be a problem. If you're borrowing from a dodgy unregulated source, that might be more of a problem.

Slithery

eddddy said:

The Estate Agent and your Solicitor should also do money laundering checks.

Since when have EA's had to do money laundering checks?

bris

The may want you to exchange contracts pretty quickly without the homeowner loan funds in your account. You can change your mind at anytime without this so they may be a bit cautios.

It's a cash purchase because it's unmortgageable and there for cheap, there may be other property developers looking so without the full funds available it will be first with the cash gets it. 

eddddy

Slithery said:

eddddy said:

The Estate Agent and your Solicitor should also do money laundering checks.

Since when have EA's had to do money laundering checks?

Since April 2018, it seems.

In April 2018, the European Parliament passed the Fifth Money Laundering Directive on the prevention of money laundering and terrorist financing. For this reason, estate agents must do these checks on everyone buying a property to make sure the money is coming from a legitimate source—they can be fined or imprisoned if they don't.

Link:  https://www.propertymark.co.uk/professelling-houses/aml-proof-of-funds.html

The relevant UK legislation seems to be "The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017" See: https://www.legislation.gov.uk/uksi/2017/692/contents/made

hazyjo

Slithery said:

eddddy said:

The Estate Agent and your Solicitor should also do money laundering checks.

Since when have EA's had to do money laundering checks?

Quite a while - am sure mine had to 4 years ago. From these guidelines it's often easier for them to check as much as possible to cover their own backsides.

https://www.gov.uk/government/publications/money-laundering-regulations-2007-supervision-of-estate-agency-businesses/estate-agency-guidance-for-money-laundering-supervision

Slithery

Well I never realised that, I thought it was just solicitors/conveyencers.

Who is responsible for complying with the money laundering regulations for a private sale with no solicitors involved? The bank that receives the funds?

lee26g

Hi, 
thanks for the info.

the lender is HSBC.
I had my offer accepted by the seller. The EA did not ask for proof of funds and has not done any money laundering checks.
HSBC tell me that once I request draw down it can be done within a week.
lots all with the solicitor now. I was just worried that when they do the money laundering checks I might run into problems.

lee

user1977

Slithery said:

Who is responsible for complying with the money laundering regulations for a private sale with no solicitors involved? The bank that receives the funds?

Well, they're the only regulated body handling the funds, so yes. Though no different from their point of view from any other hefty deposit. 

eddddy

lee26g said:

I had my offer accepted by the seller. The EA did not ask for proof of funds and has not done any money laundering checks.

It's unusual for an EA not to ask to see proof of funds.

But that's an issue between the seller and the EA, and it's not your problem.