Evidence of Savings ? A Guide for Home Buyers
It is worth understanding why we ask, because the buyers who understand it are the buyers whose purchases complete on time.
Why we have to ask
Conveyancers are required by law to understand where the money funding a property purchase has come from. This is part of the anti money laundering regime, and it applies to every firm and every buyer. It is not a judgement about you.
Property is the way large sums of criminal money are most commonly turned into something respectable. Because of that, conveyancing is treated as a high risk area, and the regulator inspects firms specifically on how well they carry out these checks. When it last reported on this, it found that a significant proportion of files it examined either had no proper checks or showed that documents had been collected without anyone actually reading them. Firms have been fined and individuals have been disciplined for getting this wrong.
So the request is not optional and it is not a formality. Your conveyancer has to reach a genuine understanding, and record it.
The word that causes the most delay
Ask most buyers where their deposit comes from and the answer is one word. Savings.
That answer, on its own, tells us almost nothing. It describes where the money is sitting, not where it came from. Every deposit is sitting somewhere. The question we have to answer is how it got there.
Think of it this way. If somebody handed you a suitcase of money and you put it in a building society account for a year, your statements at the end of that year would look completely calm and ordinary. The account would prove that you had the money. It would prove nothing about where it came from.
That is why "savings" always leads to a second round of questions, and the second round is what adds weeks to a transaction.
Break your deposit into parts
Here is the single most useful thing you can do at the outset.
Take the total sum you are putting in, and write down what it is actually made up of. Most deposits are not one thing. A typical example might look like this:
- £186,000 from the sale of our current house
- £40,000 built up from our salaries over about six years
- £25,000 my mother is giving us
- £9,000 from a work bonus last March
That takes five minutes and it transforms the process. Instead of a vague enquiry into your finances, we now have four specific items, each of which has its own straightforward paperwork. Send that breakdown with your initial forms and you will have saved yourself at least one exchange of letters, probably more.
What to send for each type of money
Money saved from your salary. Bank statements covering enough of a period to show the money building up, together with payslips or a P60. What we are looking for is the pattern of your pay going in and the balance rising.
Proceeds of a previous sale. The completion statement from your solicitor on that sale, plus the bank statement showing the money arriving. This is usually the easiest item of all.
An inheritance. A copy of the grant of probate and the letter or schedule from the executor showing what you received, plus the statement showing it arrive.
A gift from a family member. More on this below, because it is the item buyers most often forget to mention.
A pension lump sum. The letter or payment schedule from your pension provider.
A divorce or separation settlement. The court order or the agreement, plus the statement showing the payment.
Money from a business you own. Your filed accounts, your tax return and your tax calculation, along with the business banking that supports the drawings you have taken.
An investment or shares you have sold. The contract note or the platform statement showing the sale, and if you can, something showing what you originally paid in and when.
Compensation or an insurance payout. The settlement letter or the schedule from the insurer.
Money held abroad. Statements for the overseas account and an explanation of how the money was earned or acquired there, in English if possible.
The one that catches people out: the opening balance
This is the most common reason a source of funds enquiry drags on.
Suppose you send us six months of statements for your savings account. The statements are immaculate. Nothing unusual goes in, nothing comes out, and the account opens with a balance of £93,000 and closes with a balance of £94,100.
Those statements have not answered the question. They show that you had the money six months ago. They do not show how you came to have it.
Nine times out of ten there is a completely ordinary explanation. You opened that account when you sold your last house and moved the proceeds across. Or you had been building it up in a different account for years and consolidated it. Either is fine. But we will have to come back and ask, and that costs time.
What to do about it. Look at the first page of the statements before you send them. If the opening balance is already most of your deposit, tell us in the same email where that opening balance came from, and send whatever supports it. You will have pre empted the follow up question.
If someone is helping you with the deposit
Gifts from parents and grandparents are extremely common and there is nothing whatever wrong with them. What causes problems is not mentioning them.
If any part of your deposit is coming from someone else, tell us at the very beginning. We will need to identify the person giving it, understand where their money came from, and confirm in writing whether it is a genuine gift or a loan you are expected to repay. If you have a mortgage, your lender will have its own requirements about gifted deposits, and it needs to know too.
The same applies to regular help. If a parent has been transferring money into your account every month towards the deposit, that is a contribution even though it has come in gradually and even though you may not think of it as a gift. If the sums going into your account are larger than your income can explain, we will notice, and it is much better to have been told first.
A word of caution on loans. If money is being lent to you rather than given, that has consequences for your mortgage application. Telling your lender it is a gift when it is really a loan is mortgage fraud, and your conveyancer cannot assist with it.
Cash, cryptocurrency and gambling
These three come up often enough to be worth their own section. None of them is prohibited. All three take longer.
Cash. If you have money that was held physically rather than in a bank, we will need to understand what generated it. If you run a business that genuinely takes cash, your accounts and tax returns will usually do the work. If the cash simply accumulated at home over the years, expect a much longer conversation, because there is very little we can check it against.
Cryptocurrency. A record of your sale from the exchange shows the money coming out. It does not show how you acquired the asset in the first place. If you can find anything at all showing what you originally paid in, when, and from which bank account, dig it out early. Buyers who can only evidence the sale often face a much slower process.
Gambling. Winnings are lawful and people do genuinely fund purchases with them. Be aware that a bookmaker's statement showing a payout tells us the money came out. Where the stake came from is the other half of the question. It also tends to prompt questions about the overall pattern of activity on your account.
How to send documents so they are accepted first time
Small things here make a large difference.
Send full statements, not screenshots. A photograph of your banking app, or a screenshot of a balance, is very rarely acceptable. What we need is the statement your bank produces, showing your name, the account details, the running balance and every transaction across the full period. Most banking apps will generate a proper statement as a document in a few taps.
Send every page. Statements that skip pages, or that have been cropped to hide unrelated spending, will come straight back to you. We are not interested in what you spend your money on and nobody in the office is reading your supermarket habits for entertainment. We are looking at the shape of the money coming in.
Do not edit anything. Redacted, altered or partially blanked documents create far more suspicion than whatever you were trying to keep private. If something on the statement is genuinely sensitive, tell us and we will discuss how to handle it.
Send everything at once. Documents arriving one at a time, over several weeks, is the pattern that causes a purchase to slip. It also means each new item has to be reconciled against the others from scratch.
Use the firm's secure portal. Do not email statements as ordinary attachments if a secure option has been offered to you. This is your financial information and it deserves to be protected in transit.
Answer the question you are asked
If we come back with a query, it is almost always about one specific thing. A transfer in from an account we have not seen. A round sum credit that does not match your pay. A gap between what you appear to earn and what you appear to have saved.
The fastest route through is a direct answer to that specific point, with the document that supports it. Long explanations without documents, or documents without explanations, both tend to generate another round.
If you do not know the answer yourself, say so. "That was a transfer from an old ISA I closed, I will ask the provider for a statement" is a perfectly good reply and lets us keep moving.
What happens to the information
Your documents are held under the same confidentiality and data protection obligations as everything else in your file. They are used to satisfy the firm's legal obligations, they are retained for the period the law requires, and they are not shared with the seller, the estate agent or anyone else who has no business seeing them.
There is one limit to that confidentiality, and it is honest to state it. Conveyancers have legal obligations to report certain concerns, and in those circumstances we are not permitted to discuss the matter with you. It is rare, and it is very unlikely to affect you. But it is the reason your conveyancer cannot always give a full explanation for a delay, and why pressing them for one may not get you very far.
If it cannot be resolved
Occasionally a firm concludes that it cannot obtain a satisfactory understanding of where the money has come from. In that situation it may decline to act.
That is not an accusation. It usually reflects an evidential gap rather than any belief that something is wrong. Money held abroad for many years, an asset bought long ago with records that no longer exist, or cash with no supporting trail can all be entirely legitimate and still impossible to evidence to the standard the law requires.
The way to avoid it is to start early. If any part of your funding is unusual, raise it before you have an offer accepted rather than three weeks before your intended completion date.
A short checklist
Before you send anything, run through this.
- I have written down what my deposit is made up of, item by item, and the figures add up to the total.
- For each item I have the document that evidences it.
- I have checked the opening balance on my statements and can explain it.
- I have told my conveyancer about every penny coming from anyone other than me.
- My statements are proper bank generated documents, complete, and unedited.
- Anything unusual, held abroad, in cash, or in an investment, has been flagged at the outset rather than left to emerge.
Get those six right and this part of your purchase will be quick and unremarkable, which is exactly what it should be.
The questions are not about you. They are about the money, and the sooner the money can be explained, the sooner everyone can get on with the business of moving you into your new home.
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