Proof of Deposit For a Mortgage
Every lender is different, and many accept a wide range of deposit sources. Whether it’s a gift from family or friends, cryptocurrency, coming from overseas, or even a loan, there are often lenders who can consider it. To date, we’ve helped thousands of customers with unique or non-savings-based deposits, and eight of our expert team focus exclusively on this type of mortgage. We guarantee to get your mortgage approved and find you the best deal. If we can’t and someone else does, we’ll give you £100!*
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Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
Quick Summary
Common sources include things like personal savings, gifted deposits, the sale of assets, or inheritance, but there are plenty of more unusual sources too, and not all lenders will accept them.
From over 100 lenders, over 60 lenders can consider gifts from family members, 42 lenders for gifts from non-relatives, 54 lenders can consider deposits from overseas, 43 lenders can consider gifts from Ltd companies, and 19 lenders can consider a deposit from cryptocurrency.
Wherever it’s from, lenders need to see proof of where your deposit money comes from to meet anti-money laundering rules, so your deposit needs to be fully traceable and legally sourced. If you’re using a gifted deposit, you’ll usually also need a formal, signed letter confirming that the money is a gift and that there’s no expectation of it being paid back. And if you’re borrowing it (personal loan or otherwise), then you’ll need to meet the lender’s affordability with the loan repayments included.
The way you’ll need to evidence your mortgage deposit will depend on where it came from. For traditional deposit sources like personal savings, most lenders will want to see the money building up in your bank account over six months or more.
Below is an overview of the evidence you’ll need to produce for each deposit type.
The best evidence you can provide for personal savings is at least six months’ worth of bank statements that display regular in-payments from your employer, pension, or any other legal source of income and the money slowly growing in your bank or savings account.
If you have multiple bank accounts and plan to use capital from all of them for your deposit, you should provide six months’ statements for each account.
Suppose you’ve received a lump sum from selling a property or other assets such as a car, boat or other legal sources. In that case, you should provide evidence in the form of ownership documents alongside a copy of your bank account statement showing the proceeds from the sale.
If the cash comes from a property, you should also provide a copy of the completion statement once the sale has been finalised.
Suppose you are releasing equity from an existing property to fund the deposit for a second one. In that case, you will not be required to provide evidence if you’re negotiating a larger mortgage to cover both properties with the same lender. They will already have full visibility of your situation.
They will, however, require proof that you can afford the repayments for a larger mortgage, which they will assess by calculating your debt-to-income ratio.
If you’re funding a deposit in this way, the executors must provide a certificate of deposit inheritance.
This document will need to state how much you are receiving as a beneficiary, and you will also need to provide a copy of your bank statement that shows the sum has been transferred from the solicitor or executor’s account into your bank account.
For any form of gifted deposit, such as your parents providing your deposit, your solicitor will require a legal agreement which confirms that the money being provided is a gift that will never need to be repaid and that the donor has no rights over the property. It should also detail the value of the gift and be signed by all parties.
Provided you are using funds from an established bank account or similar overseas account, it is far easier for solicitors to trace the origin of the cash and rule out any suspicions of fraudulent activity.
Proof can be provided similarly to personal savings in the UK, with the buyer providing copies of a bank/savings account statement displaying regular in-payments for savings (the sources must again be traceable).
If you’re using gambling winnings as a mortgage deposit, you will need to provide a receipt confirming your winnings and the amount, as well as a copy of your bank statement showing the incoming payment from the gambling company.
However, if your winnings were in cash, you would struggle to prove the source of your mortgage deposit, which could severely inhibit your chances.
For the handful of solicitors that will accept cash, you are more than likely to find that there is a limit to the amount they will accept (typically no more than a few hundred pounds).
If you have a large sum of cash in your account that hasn’t been sourced by any of the options we’ve covered, speak to a solicitor or contact a mortgage broker.
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Important:
If you’re still unsure how to evidence your deposit or think you don’t have enough proof for the lender, speak to a mortgage broker. They can help you prepare the right paperwork and match you with a lender who is flexible on deposit types and more likely to approve you.
How likely your deposit source is to be accepted
The tables below reveal how likely it is that your mortgage deposit will be approved based on its source.
We’ve categorised each deposit type to reflect how widely accepted they are…
Widely accepted deposit sources
| Deposit Source | Mortgage Lenders’ Stance |
|---|---|
| Personal Savings | Every lender is happy with a deposit funded by personal savings, although some may require proof in the form of bank/saving account statements so there is evidence of the increasing balance over time |
| Proceeds from the sale of a property | Usually there are no problems with this, as long as the property proceeds are not undercharged by someone else. There must also be evidence of these funds in your bank account at the time of completion |
| Equity released from a property | This doesn’t tend to be a problem, but your mortgage lender will need evidence that you will be able to keep up the repayments for a larger/second mortgage if you’re buying another property on top of the one you released the equity from |
| Inheritance | Most lenders are happy to accept an inheritance funded deposit but will require a letter from the executor detailing the amount you are receiving, and evidence of the funds in your accoun |
| Gifted deposits from close family | Lenders tend to be happy with gifted deposits from close family members such as parents, grandparents and siblings, and will require a signed legal agreement from all parties detailing the terms and value of the gift |
| The sale of other assets | Deposits funded by the sale of assets such as cars, boats, valuable memorabilia, artwork, or anything else that is able to be sold legally are usually acceptable forms of deposit, provided it is legitimate and you can present evidence of the sale |
If your mortgage deposit came from one of the above sources, you should have a wide range of lenders, rates and deals to choose from, based on the type of deposit you have alone.
That said, mortgage eligibility comes down to much more than just the source of your deposit. The amount of deposit you have, your income and your credit history will also be assessed, so it’s a good idea to speak to a mortgage broker before you apply to make sure you get the best possible deal based on all of these factors.
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Sometimes accepted
| Deposit Source | Mortgage Lenders’ Stance |
|---|---|
| Gifts from distant relatives | While close family are not a problem, gifts from more distant relatives such as aunts, uncles, step-parents or cousins may be declined. Whether the person is related to you by blood can also impact eligibility |
| Overseas savings | Deposits sourced from savings overseas can be a tricky one as it can be difficult for lenders to trace the origin of the cash and to confirm there is no risk of money laundering. Some lenders are more flexible. If, for instance, the funds come from an established bank account and can be legitimately traced |
| Gambling winnings | Gambling funds may be accepted without any issues, but lenders may be hesitant if gambling is a regular occurrence. Some may want to examine your bank statements and deduct gambling income from your total available income, which may considerably impact affordability |
If your mortgage deposit comes from one of these sources, the chances of being rejected or settling for a less favourable deal are usually higher. It’s a good idea to speak to a mortgage broker so they can help you offset this risk by matching you with the right lender.
Finding the ideal mortgage lender the first time can help save you time and money due to your chances of landing a low interest rate. It can also ensure you avoid negative marks on your credit report by minimising the hard credit checks you’ll need.
Rarely accepted
| Deposit Source | Mortgage Lenders’ Stance |
|---|---|
| Gift from friends | Gifted mortgage deposits from friends or family friends are regarded as less trustworthy than a gift from close family. Due to the associated risk, very few mortgage lenders will consider approving this, but there may be a few that will, and it will help your case if you contribute some of your own cash to prove your investment |
| Gift from an employer | Gifts from a third-party such as an employer are not usually accepted due to the risk of money laundering and fraud. For lenders that will consider accepting under these circumstances, expect extensive due diligence checks. These assessments will scrutinise the source of funds and may include ID verification checks on the donor |
| Personal loans | Deposits sourced through taking out personal loans or other forms of unsecured borrowing (such as credit cards and overdrafts) are generally not accepted by most lenders because you’re borrowing money to borrow money, which won’t fill them with confidence about your financial position. Depending on your circumstances, however, a handful of lenders might consider accepting your deposit, including some mainstream mortgage providers |
| Cash | Cash tends to be a big no-no from many lenders. Cash deposits into an account that cannot be traced generally cannot be used for a deposit, and can even taint the whole account, meaning that none of the money in it can be used for a property purchase |
If your deposit source is one of the above, speaking to a mortgage broker is vital to boost your chances of approval. Without a broker, your chances of being refused a mortgage or having to settle for unfavourable rates are very high.
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Why do you need to evidence your mortgage deposit?
In the UK, every mortgage borrower must disclose the source of their deposit. Mortgage lenders and solicitors have strict anti-money laundering regulations and guidelines in place to ensure mortgage deposits are funded by legal, legitimate sources.
Where your deposit has been sourced from is vital information in the mortgage application process. If your deposit originated from a non-approved source, your mortgage application would likely be declined, so it’s important, to be honest about your application from the offset to ensure everything goes smoothly.
What’s more, you will also be asked for proof of the source of your mortgage deposit funds, and lenders and/or solicitors will carry out extensive checks to confirm the claims you have made about its origin.
Evidence of the source of your mortgage deposit can take various forms, such as a review of bank/savings account statements, signed contractual agreements, and particular forms of certification.
Key takeaways from this guide
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Some deposit sources are more acceptable than others:
If you have what most mortgage lenders would class as a ‘non-standard’ deposit source, your chances of mortgage approval and landing a good deal could be far slimmer. -
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A broker can help you evidence your deposit:
If you’re unsure how to evidence your deposit or think you might be declined because of a ‘non-standard’ deposit source, speak to a mortgage broker. They can help you prepare the right paperwork and introduce you to a lender who accepts unusual deposit types. -
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We can match you with the broker you need:
There are brokers who specialise in helping customers with ‘non-standard’ deposit types, and that’s the kind of expertise you’ll need to boost your chances of success. Our broker-matching service will pair you with a mortgage advisor based on your needs, circumstances and deposit type.
Call 0330 818 7026 or make an enquiry, and we’ll match you with your ideal broker today.
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FAQs
Don’t worry; this isn’t something extra you’ll have to cough up. The exchange deposit is merely a part of the final deposit amount, payable at the point of exchange. It amounts to 10% of the property’s purchase price and is non-refundable if the deal collapses.
For instance, if you’re putting down a 15% deposit, you will initially pay 10% of it to serve as the exchange deposit and the other 5% upon completion. The only exception is if you have a 95% mortgage, in which case the full 5% deposit is payable at the point of exchange.
It’s sometimes possible to get a deal in principle without proving where your deposit funds came from, but this is a non-binding agreement and is by no means a mortgage guarantee.
After this point, you’ll need to prove your deposit if you want a full mortgage offer.
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Pete Mugleston
CeMAP Mortgage Advisor, MD
Pete, a CeMAP-qualified mortgage advisor and an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete successfully went the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained and his love of helping people reach their goals led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!
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