Proof of savings for mortgage app

makeorbrake

I intend applying for a small mortgage later this year. I have cash which I intend to lodge to account prior to making the mortgage app. (for my own reasons, it doesn't suit to do so right now).

I read on another boards thread of someone that presented with a relatively similar scenario - and had a hard time with the bank....their concern being that as the funds were not on account for very long, they questioned whether the money was borrowed.


Is this a common reaction from the banks lending centres? How likely am I to come up against this problem?

Not sure if this is relevant to the query but this would be for an investment property and the mortgage amount would represent no greater than 30% of the overall value of the property.

drunkmonkey

I'd suspect if you do what you intend they'll either think you borrowed it or its moneylaundering which they have to report by law.
Can you not invest the money somewhere beside the bank and just show the bank the statement from your savings when it's required.

Jim2007

makeorbrake wrote: »

Is this a common reaction from the banks lending centres? How likely am I to come up against this problem?

Not sure if this is relevant to the query but this would be for an investment property and the mortgage amount would represent no greater than 30% of the overall value of the property.

Unless you can very clearly show the source of the cash, you are going to run into issues concerning money laundering... All banks throughout Europe are required to flag up this kind of behavior to the local authorities. Furthermore, regular small payments over a short period often get flagged for investigation as well.

When it comes to granting a mortgage, banks like to see a history of saving, resulting in an accumulated amount rather than money magically appearing in an account. Even more so in the current climate, where they don't have so much to lend out.

Liam D Ferguson

I second everything Jim2007 has said.

My only addition is that if you can prove to the bank that the money is from an unborrowed source and that you have paid all tax liabilities on it (if any) then it shouldn't cause you any issues. But it won't be used as evidence of an ability to save regularly.

trxking

makeorbrake wrote: »

I intend applying for a small mortgage later this year. I have cash which I intend to lodge to account prior to making the mortgage app. (for my own reasons, it doesn't suit to do so right now).

I read on another boards thread of someone that presented with a relatively similar scenario - and had a hard time with the bank....their concern being that as the funds were not on account for very long, they questioned whether the money was borrowed.


Is this a common reaction from the banks lending centres? How likely am I to come up against this problem?

Not sure if this is relevant to the query but this would be for an investment property and the mortgage amount would represent no greater than 30% of the overall value of the property.

hi mate what do you consider a small mortgage ??I have over 60k deposit saved just waiting for the right house Im 23 do you reckon a 140k mortgage would be small??

makeorbrake

@DM/Jim2007/LDF: The cash is savings - accumulated over time. I had (and still have) some savings on deposit. However, I had savings accumulated in cash prior to the major concern over the euro. When that hit, I procrastinated as to what to do with it - but in the end just held onto it. I guess I have been looking at property over that timeframe and the intention was (and still is) that it would be used on this. I guess I will lodge it - and tell them exactly that. They can think what they like after that!

trxking wrote:

hi mate what do you consider a small mortgage ??I have over 60k deposit saved just waiting for the right house Im 23 do you reckon a 140k mortgage would be small??

Well, it's not relevant what I consider small -as this can only be considered relative to the income of the individual. Therefore, you have to assess this for yourself. However, sounds like you have a very good deposit built up - given that you're just 23. As regards the mortgage amount, you have to put a bit of thought into that. Stress test your own ability to pay and be realistic in doing so. Add at least 2% to current mortgage interest rates - and base it on that (as the current wisdom seems to suggest that it's inevitable that higher rates will come into play in the not too distant future).