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Original poster

Why would an estate agent want to know how our funds are made up?

51 replies

Letsgotocornwall · 20/07/2017 12:48

We've had an offer accepted on a property, the estate agent wanted proof that we were able to get the mortgage up to the amount, etc. Our lender has sent details verifying we can pay the offer price. The estate agent have now asked how this is made up? I.e. How much deposit, how much mortgage? Is this usual?

OP posts:
MarshaBrady · 20/07/2017 15:27

It would be really silly for them to push it, given you could say no and walk away. Definitely agree that once an offer is accepted it's about getting it to completion.

Boredboredboredboredbored · 20/07/2017 16:21

I'll tell you why. My buyers pulled out a few weeks ago after 4.5 months of pissing around when they eventually discovered they couldn't get the mortgage. I've sacked my estate agents as they did not do their job properly by vetting these dreamers.

If I was selling my house to you not accept your offer until you could prove where your funds were coming from. They aren't trying to push you higher they are ensuring you can afford to buy the house.

kingjofferyworksintescos · 20/07/2017 17:39

As bored said
I would want agent to ask for proof of funding before agreeing a sale
Too many buyers are dreamers that have inadequate funds

AlfaMummy · 20/07/2017 17:43

Be vary. When my husband was buying his first house he used the agent's in house financial advisor to arrange his mortgage, who then told the agent he could pay more than he had offered. The agent then told my husband he had to up his offer as they knew he could afford to pay more!!

Ecureuil · 20/07/2017 18:21

We had to provide this info. I assume they were just checking we were a safe bet. FWIW we could have afforded more (our agreement in principle was for £100k more than the house we bought and we had a decent deposit) but they didn't try and push the price up or anything like that.

Bearbehind · 20/07/2017 19:20

The primary reason is to see how 'safe' a buyer you are.

Someone who needs a 95% mortgage and can barely scrape together the deposit isn't going to be a good option if there are multiple interested parties.

The added benefit to the EA is they know if they can push you further but that's not the main reason for needing the info.

Original poster
Letsgotocornwall · 20/07/2017 19:48

As I said in the op, we have already verified that we can pay the offer price, my question was about why they wanted to know how large the deposit was.
I asked them and they said it was to make sure that it was not a gift as obviously this would slow things down. I'm not entirely sure whether this is true or not, I suppose we'll find out along the way.

OP posts:
xandersmom2 · 20/07/2017 19:48

What bearbehind said. If you have a smaller deposit then you may have more challenges getting your mortgage approved. If your valuation comes in low then you may also be more likely to have to pull out (if you can't make up the difference). It's a way of them seeing how 'risky' you are as a buyer, especially if there are other potential buyers in the running.

Original poster
Letsgotocornwall · 20/07/2017 19:49

Alfa, that's terrible. I wonder how many people go ahead and don't question that situation?

OP posts:
xandersmom2 · 20/07/2017 19:50

If your deposit is a gift then it doesn't necessarily slow things down. It usually just requires a letter from the gift or (that was my experience, anyway).

xandersmom2 · 20/07/2017 19:52

*giftor. Hate autocorrect!

Bearbehind · 20/07/2017 19:54

All this stuff makes a difference nowadays OP.

If you are relying on a gifted deposit, i.e. Can't demonstrate the ability to save, then need a very high ltv mortgage you're not a 'safe' buyer.

It's not sinister.

QuackDuckQuack · 20/07/2017 20:26

I guess that they may also want to know that if your lender values the property at less than your offer, you can make up the difference with a higher deposit.

AlfaMummy · 20/07/2017 20:32

The gift issue is one for your bank and solicitor. If a gift of money is going towards the deposit, all you need is a signed letter from that person stating it's a no strings attached gift. The mortgage co will insist on such if a gift is being used. It would never slow things down in any event, even if it were the case.

TheCrowFromBelow · 20/07/2017 20:45

The larger your deposit the more attractive you are because there is less risk that your lender will refuse the loan later down the line.
They don't want you to borrow more, agents like cash buyers not 95% borrowers.
Alfa I'm fairly sure what happened to your husband is illegal and the agent risks a big fine by doing that - much bigger than the fee they'd earn, shocking behaviour!!

sahknowme · 20/07/2017 21:19

Tell them to speak to your solicitor or mortgage broker if they have any concerns about your ability to purchase. But you have nothing to gain from telling the seller's EA how much you could afford to pay if they decide to gazump.

SteppingOnToes · 20/07/2017 21:29

I wish all would as someone strung me along for 8 months and pulled out on the day of completion as it turns out they didn't actually have a mortgage offer! They had insisted on vacancy before completion and as I was moving back to england from scotland this effectively left me paying for two houses as I had quit my job and relocated. I ended up losing the house :(

Ecureuil · 20/07/2017 21:52

We had no problems with a gifted deposit, it didn't slow things down at all. Just needed a letter to say it was a gift and not a loan.

CaptainAmericasShield · 20/07/2017 21:52

Having a mortgage in principle is not the same as having an agreed mortgage however. We had one from our bank who turned us down when we went through the full process a few months later!

TheCrowFromBelow · 20/07/2017 21:57

You're not telling them how much you can afford- you're telling them how you plan to fund the purchase, it is very different.

Just because a buyer has a large deposit doesn't mean a bank will lend them any more money. They will have a high LTV which means the loan is lower risk for the bank, but a lender will still take into account their earnings when agreeing the loan and
you cannot automatically afford a larger mortgage just because you have a big deposit!

sorenipples · 21/07/2017 06:32

As Giraffe said, with the introduction of the 2017 money laundering regulations estate agents need to conduct due diligence on the buyer and seller. Checking your source of funds is a component of this. The main intent is to stop corrupt foreign officials using misappropriated funds to buy property. Previously there were few checks on cash buyers (no bank involved ) especially if the solicitor was complicit. The level of checks the estate agent do will be driven by their internal policy and their assessment of financial crime risk of the transaction, a high level source of funds enquiry may be their standard check. The current supervisor, HMRC, is likely to get tough on estate agents so they will be increasing keen to show they have ticked the boxes.

RandomlyGenerated · 21/07/2017 07:14

The cynical part of me says that the EA has a more expensive house that they would like to sell you instead (I have known unscrupulous agents do this). The less cynical part of me says it's to do with the money laundering regs.

curcur · 21/07/2017 07:15

We had to provide evidence of our deposit which was approx 80% of the sale price. It was the seller that wanted this info. It was a right pain as money was in so many different investments. The estate agent thought this was totally OTT and said that they'd never provided so much proof before. The sellers also wanted to know whether us being unmarried was going to cause a problem with the purchase! This was 6 years ago.

RandomlyGenerated · 21/07/2017 07:38

SteppingOnToes at least you got to keep your numpty buyer's deposit though?

HipsterHunter · 21/07/2017 14:04

Too many buyers are dreamers that have inadequate funds

That's how I got my house - the previous accepted offer fell through because he was a dreamer who couldn't get the mortgage for the amount he had offered!

Then though the vendors were all like "I know it is worth full asking because we had a full asking offer. Yeah, you had a full asking price offer from someone who couldn't afford to pay it! Meaningless. Anyway, eventually they accepted my offer.

@SteppingOnToes but you had already exchanged? so you got to keep a massive whack of cash?