Proof of funds/Source of funds - How far back?

patchyX2

I understand that when buying a home you need to provide proof of funds, and source of funds, to prove that you have the money, and to satisfy anti-money laundering checks.

How far back in time do these checks go?

I was gifted a fairly substantial sum of money back in early 2022, and then again in mid 2021. I imagine they will want to see that. I was also gifted some money ~12 years ago when buying my first house. Presumably they won't go back this far? Just curious as to what the cutoff point here is.

My wife and I have several bank/savings accounts and have shuffled money around a lot in the last few years (to get the best interest rates, not for dodgy means :-D), so I can see creating a paper trail of the money is going to be a bit of a pain.

Also, how does it work if you don't 'use' the gifted money? Here's an example... I want a 200k mortgage. I have a 100k in my bank. 50k of that was gifted. 50k of that was saved. If I'm only putting down a 50k deposit, would I still need to provide source of funds for the 50k gift, even though I'm not using it to fund the deposit?

user1977

There is no standard answer. You'll need to check with your solicitor (or whoever else is asking) how far back they want to go and how they approach it generally. Often they are only looking back a matter of months, not years.

propertyhunter

I was asked for 3 months of statements from the UK bank accounts where the money had come from. It's unlikely you will be asked about the sources of funds going back years, especially if the cash has been sat in a UK savings account.

Singlemummy_2

I was asked where the deposit was coming from, I said sale of property 6 months prior, and savings which came from salaries 

I had to show completion certificate then the funds being deposited into my account, I had moved them to a savings account then switched again due to interest rates so had to show those movements. Also proof of income from employment  

if your deposit is coming from savings, state that on the form 

ArbitraryRandom

Rather than a fixed timescale, they generally want to know where the money came from - so bank statements showing £100k for 6 months just sitting there don't really answer that question but those same bank statements showing a few £k being added every month from salary would. 

So in the case of the £100k you mention, if the £50k 'gift' has been sat in the account for a year and you have been adding to it regularly to make it up to the £100k, then it's unlikely to be questioned as the few months statements you provide will show it regularly increasing and will probably mean they assume the whole amount was accumulated from savings over an extended time. 

But if it is a new large amount on the statement or there's been no activity at all in the period covered by the statement then they might ask where it came from - and if you say it was a gift then generally all they need is a letter from whomever gave it to you that basically confirms it was a true gift and that individual will have no interest in the property once purchased. 

Slinky

We were asked for 6 months worth which was a pain as OH had been doing a lot of moving around rate chasing. Then we didn't proceed on that property and I had to do another 6 months worth about a year later when we found our current property.

The chunk of money that's been sitting there longer than that was deemed not to be an issue, it was just an opening balance in our accounts.

jonnydeppiwish!

I was just asked to complete a form and then show a premium bond statement when I gifted a deposit to my son

iishappy

I have just been through proving £180k for a house purchase which was accumulated over a 7 year period from wages and stocks and shares. It was a massive paper trail and included multiple stocks & shares accounts business bank account personal bank accounts and 10+ different savings accounts. (The amount of PDF’s I sent them was insane)

They needed to see exactly where the funds had accumulated from and every larger transaction that moved in and out of the accounts. It took 2 weeks for the solicitors to complete the checks and was signed off by a senior partner.

molenpad

When I bought a house previously my deposit was coming from equity of the sale of my current property and topping it up with the balance of my savings account which we had accumulated the balance over a couple of years with regular payday movements of money. All that was in order.

I was also gifted £2500 by my dad to help with fees and moving costs - nothing more than a bit of generosity as he had a bit of cash saved up and wanted to help us out and it doubled up as a wedding present too. I thought best to declare this as I put the money in our savings, though it did not boost our affordability of the property as we already had enough money. 

To say it wasn't worth the hassle in accepting this gift is an understatement - though I'm sure we did the right thing in declaring it. The lender asked for a letter which my Dad provided to say he had no interest in the property and it was not a loan snd it ws not intended to be used as part of the deposit, and that was that, but it took 3-4 weeks to provide the correct information to the solicitor before they were happy with the paper trail.

I had to set my Dad up on online banking so he could get a statement, but that wasn't enough as it would not go back far enough to show accumulation of the funds (could only get last 3 months as a new online banking user), so we had to get them directly from the bank. Solicitor asked for 6 months worth of statements. Since my Dad had just had this money lying around for a few years it didn't really show much in terms of exactly how it was accumulated. I think his total balance was something like £18000 in that account with him and my stepmother occasionally dipping in and out of it for essential purchases etc.

My dad also did not have a photo ID or valid passport so I had to pick him up and drive him 135 miles back here to sit him in front of the solicitor with his paper driving license and bank statement to prove he was who I said he was. 

MattMattMattUK

When I bought I ended up having to go back three years because the solicitors seemed to be being particularly difficult about proof of funds, all the funds were savings from income, bank accounts were not complicated, money had not been moved around much either. They did at one point say that they might need five years, after initially only asking for a current statement, then six months, then a year, then two and then three, I told them that if the kept dragging it out I would find another solicitor, and they finally decided that three years was acceptable. 

I fully understand the need for AML checks, but the vague way they want lay out the requirements and the seemingly open ended requests need to be brought under some kind of control. 

Jonboy_1984

I think the problem is that they don’t want to create a blueprint of perfect evidence that the criminals they are guarding against can work too….