When you make an offer on a property, the estate agent may ask for proof of finance. Our Q&A explains why and when estate agents ask for it and what you may need to provide.

Are estate agents allowed to ask for proof of finance?
When you make an offer on a property, your estate agent may ask you for proof of finance. Here’s why he asks for it and what you may need to provide.
Under the General Code of Conduct, all estate agents must take reasonable steps to find out how a buyer will pay for a property when making an offer. This includes a real estate agent checking the source and availability of funds. He may ask these questions:

  • Are you selling a property?
  • Are you taking out a mortgage?
  • Do you have cash available to buy the property outright?
  • Do you plan to buy with a combination of the above funds?
    Your estate agent will also want to see proof of funds. He is allowed to do this and is obliged to do so for odontological reasons.

When do I have to prove funds and to whom?
When you buy a property, you have to provide proof of funds several times. This is because you have to prove that you can afford the house you want to buy. The estate agent, your solicitor and your mortgage broker (if you need a mortgage) are all legally required to prove that you have the money to buy the property.
However, you do not have to provide proof of money until you have made an offer on a property. However, some estate agents may ask for it earlier. There is nothing wrong with this as it strengthens your position during the price negotiation and shows that you are a serious buyer.

Do I have to work with the estate agent’s mortgage broker?
No. But we recommend working with your broker to apply for a mortgage. This can speed up the buying process and makes it easier for you when everything comes from one source.

My broker wants to see bank statements – is that normal?
In principle it is, however it depends on when the estate agent wants to see the bank statements. An estate agent does not have the right to ask for proof of your funds before you have made an offer on a property.

What proof of funds can I use?
Proof that you have funds could be via a bank statement, a mortgage agreement in principle or proof that you are selling a property. In this case, the agent can speak to the real estate agent you are selling with to get a status report. If you are a cash buyer, then a bank statement will be sufficient to prove that you have the money in the bank.

What is the difference between proof of money and source of money?
These are two very different things, but estate agents can ask for both.

  • Proof of funds is proof that you have the money you need to buy a property.
  • Source of funds is proof of how you came into possession of the money.

What source of funds evidence can I use?
It is up to you to prove that your money did not come from the proceeds of crime. So you need to provide evidence of how the money came into your possession lawfully.
If you can afford to buy a property outright without taking out a mortgage, you are considered a cash buyer. This means that an estate agent will need to see proof that you have the money, and they are also likely to ask where the money came from.

  • Bank statements showing that you have saved the money over a period of time.
  • A mortgage agreement in principle from a lender.
  • Proof of stock market gains.
  • Sale of a property. A copy of the closing statement from your solicitor. Alternatively, a copy of your bank statement showing that you received the money from a solicitor may be acceptable.
  • Savings. If you have saved the money yourself, you will need to provide bank statements over a period of time showing how you have gradually built up the money.
  • Pension. A copy of your pension statement and a copy of your bank statement showing that the money was received from a pension company.
  • Compensation. A copy of the letter you received from a lawyer or court confirming your compensation payment.
  • Gift. A letter from the person giving you the money and proof of how it came into their possession.
  • Inheritance. Evidence from the executors of the estate.
  • Gambling win. Did you win the lottery? Lucky you. If you plan to buy a house, you’ll need to provide a receipt to prove you won.
    The estate agent is legally obliged to check whether your money is the proceeds of crime as defined in the Money Laundering Act. This means that you must explain your financial situation to them.

Why do I have to be careful when transferring money abroad?
Money laundering regulations can cause problems when you receive money from abroad to help you buy a house. It is possible that your solicitor will refuse funds if the money comes from a high risk country or from someone connected to a high risk country.
Under the rules, all countries are classed as high risk except: Australia; Austria; Belgium; Canada; Cyprus; Denmark; Finland; France; Germany; Greece; Hong Kong; Iceland; Japan; Ireland; Italy; Luxembourg; Malta; Netherlands; New Zealand; Norway; Portugal; Singapore; Spain; Sweden; Switzerland; United Kingdom and the United States.

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