Both your lender and your conveyancer are required to establish where your deposit came from. Not as a formality, and not as a judgement about you: they are legally obliged to, and they will hold the case until they are satisfied.
The time to sort it out is before the offer, not the week the money is due.
The easy ones
- •Savings built over time. Statements showing the balance and the pattern of saving. Straightforward.
- •A Lifetime ISA or Help to Buy ISA. The provider’s statement. Be aware of the rules and the timing on withdrawal, which your conveyancer handles.
- •The sale of your current home. The memorandum of sale and, on completion, the conveyancer’s completion statement.
- •A bonus or a redundancy payment. The payslip or the settlement letter showing it.
A gift from family
- 01A letter from the giver
Confirming the amount, that it is a gift and not a loan, that no repayment is expected, and that they will have no legal interest in the property. Your adviser or conveyancer will have a template; most lenders have their own form.
- 02Evidence of the giver’s own funds
Bank statements showing the money sitting with them and, where it arrived recently, where it came from. People are sometimes taken aback by this. It is not personal — the obligation follows the money.
- 03Identification for the giver
The conveyancer will need to identify them in the same way they identify you.
- 04Time
If the giver lives abroad, or the money is held overseas, allow considerably longer and start considerably earlier. Overseas funds need a clear, documented trail, and some lenders will not accept them at all.
Never describe a loan as a gift. If family money is repayable it is a commitment, and the lender has to know, because it changes the affordability calculation. Saying otherwise on an application is a false declaration, and it is not a corner anybody should be cutting on your behalf.
The ones that need care
Cash
Physical cash paid into an account is genuinely difficult to evidence, and a number of lenders will not accept it at all. If you have savings in cash, bank them early — months early — and keep whatever shows where they came from.
Cryptocurrency
Some lenders accept the proceeds, some will not. Those that do want the full trail: the purchase, the holding, the sale, the transfer into a UK account. Convert and bank it well in advance and keep every statement.
Money from overseas
Possible, but expect close scrutiny and allow much more time. A documented chain from source to your account is what is needed, and translations may be required.
Money from a business
Drawing a deposit out of your own limited company is fine, but the tax treatment needs thinking about, and that is a conversation with your accountant before you move the money rather than after.
Two practical habits
Get the deposit into one clearly identified account and leave it there. Money that moves between four accounts in the weeks before completion creates a trail somebody has to follow, and following it takes days.
Keep your statements clean in the three months before you apply. Not because anybody is judging your spending, but because a gambling pattern, an undisclosed loan or regular payments to somebody the lender cannot identify all generate questions, and questions take time.