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What Deposit Sources are Acceptable in the UK?

23 Sep 2023 | Almas Uddin
What Deposit Sources are Acceptable in the UK?

What Deposit Sources are Acceptable in the UK?

One of the challenges for mortgage applicants is that they will need to demonstrate where their deposit comes from. Lenders have strict rules about acceptable deposit sources and may refuse a mortgage altogether if they cannot accept the deposit.

These rules all relate to money laundering, and the regulations vary between lenders.

In this guide, the mortgage brokers team has summarised the most common deposit sources and how they might impact your mortgage approval chances.

What Deposit Sources are Acceptable in the UK?

Deposit source

Likelihood of acceptance

Savings

If you use your own savings as a deposit, you are unlikely to have any issues. Most lenders are happy with this, although some might ask for a history of bank statements to verify how the total has accumulated.

 

Gifts

Deposits gifted from immediate family members are widely accepted. That usually includes parents, grandparents, siblings, aunts and uncles.

 

Gifts from more distant family members are less common, and some lenders won't accept this as a mortgage deposit.

 

Gifts from friends or third parties are usually rejected due to the higher risk of fraud - although some lenders can negotiate on this, with due diligence checks to verify the authenticity of the gift.

 

Inherited funds

Usually fine.

 

Property sale proceeds

Commonly accepted, provided there is no charge against the property in another name, and the funds have cleared.

 

Asset sale proceeds

Most lenders will accept a deposit raised from selling another asset, such as a car, a boat or a valuable possession.

 

Unsecured loans

Usually rejected, credit card or personal loan debt is often considered irresponsible lending.

 

A small number of lenders may accept a deposit, although they will need to assess affordability and the total debt to income ratio carefully.

 

Bridging loan

Short-term bridging finance is often an option as an alternative to a mortgage, for example, to buy an auction property or to buy a rental investment that isn't habitable so cannot be mortgaged straight away.

 

Gambling wins

A tricky area - some lenders will approve a deposit sourced from gambling wins, although they will usually need to see bank statements and conduct an assessment of your affordability.

 

Overseas deposits

Lenders may reject deposits from foreign accounts since the lender can't easily verify the source of the funds.

 

However, some banks will accept this deposit, provided they can track the money and have evidence such as bank statements showing that the funds are legitimate.

 

For any help with unusual deposit sources or verifying which lenders will accept your deposit, give Revolution Brokers a call on 0330 304 3040, or email the team at [email protected].

These rules all relate to money laundering, and the regulations vary between lenders.

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