Why do Banks want to know where your deposit is coming from?
Finding the money to get a deposit for a home is an immense struggle in this day and age. With house prices rising, by some eight thousand pounds already this year, it seems that the amount required is only going to get bigger. When you also consider that the smallest deposit you need is ten per cent of the asking price, and the average price of a home is £275k, you’ll need at least £27,500. Given this is a sizeable amount of money, banks and mortgage lenders legally need to know where it came from.
One of the ways that they do this is by using AML Identity Verification to make sure that you are who you say you are. For the most part, the deposit is gained by savings, using the equity in a home or being given it as a gift from a relative.
The reason that banks and lending institutions look closely at where the deposit comes from is due to the fact that a house purchase is a great way to launder money. When a house is bought, you must abide by specific rules. For example, if you don’t like the property, you are stuck in it for at least six months. You cannot sell it during this time; banks and lenders will make you wait until this time period has passed or at least explain why you are looking to sell so soon after purchasing the property.