How soon in the process do we need to show proof of funds for a deposit?

[InTheCludgie]

We are planning to move house this year and depending our actual budget (only have a rough idea atm) our LTV should be about 40%. The deposit will be made up of the capital in our current house, an inheritance left by my DF which i've had for a couple of years now, and the inheritance DH is due to receive from the sale of his MIL's house (she passed away in October).

Apparently MIL's home isnt subject to probate (as it was placed in a will trust when FIL passed away and DH was made trustee) so looks like it can just be put on the market once its cleared out. The area is one where houses go quickly and for about 20% over asking price as the schools are among the best state schools in the country so is very popular with families.

Ideally if a house we like came up we would like to make a move for it as quick as possible but when in the process of selling MILs home would this be best? I know that if a house came on the market tomorrow it would be too soon as DH hasn't even finished clearing his mum's place yet, but say if it had an offer on it with a prospective sale date, would that be too soon also? Or should we really wait until the house is sold and funds are in the bank?

We only live a mile from MIL's home so within the same sought after area and have been told by the EA who gave a rough value on our home that it will sell quickly, so things might move fast if we were to offer on a place, get accepted, then put our current house on the market. (As an aside, I know that there's a lot of chat on this forum about people should sell their current house before trying to buy another but EA has said it doesnt have to work that way where we live as this area is so in demand).

Thanks if you have any useful thoughts!

I'm not sure if it depends on area but when we started viewing, the EAs often wouldn't even allow us to view until we had shown proof of deposit and MAIP

We have been asked to show proof of funds immediately after making an offer.
I can't imagine in the current climate an estate agent taking you seriously if you haven't sold tbh.

Proof of funds isn't so much the issue here as the fact you won't be an attractive buyer because you have two houses to sell and therefore twice the chance of things going wrong. In a competitive area I expect sellers will choose a buyer with less complicated finances. You'll be in a much stronger position if you wait until that property has exchanged.

Hi ThreeB this was a concern of ours, especially as it seems to get mentioned on here a lot, but when we had the EA out we did query if we would be taken seriously and she said that it wouldn't be a problem as our own house is in a very in-demand area. We are in Scotland though so not sure if it works a bit differently to other areas of the UK. We viewed a house at the start of December (which was well under budget and could have been afforded without DH's inheritance contribution) and the EA never even queried our status, so to speak.

How much of the deposit will MIL’s house sale constitute? If you have e.g. enough for 20%LTV and can get an agreement in principle I don’t think there’d be any issue showing that but then amending the mortgage offer later down the line with the additional deposit. Only issue would be if you were looking to reduce the deposit after offer, not increase it?

To answer your question we bought and sold last summer. We showed proof of funds immediately after the offer was verbally accepted, it was a condition of getting the place marked as sold on Rightmove/viewings stopping. Our flat which we sold went to a bidding war so the two interested parties showed their proof of funds to the EA before we accepted as they wanted to know both were serious buyers.

Cross post - worth making sure you get answers from Scottish posters, the whole system is totally different up there from the limited amount I know!! (Mostly better than the E&W system but that’s another thread!)

NotVictorianHonestly I never even thought of the implications of having two homes to sell, so maybe we should wait until MILs home has an offer on it. Dollywilde I think if we were to go to max potential budget then DHs Inheritance would make up just under a third of the deposit value. There's a good chance that not only will we sell ours and MILS homes with the same EA, but the house we buy may also be marketed by them too as they seem to have the lions share of business around here.

I'm in England but had to show AiP and proof of deposit as well as solicitors details before MoS was issued.

I’m in Ireland, not the UK, but market is booming around us.

We bought last year, were chain-free, and had to show proof of funds before viewing.

We recently bought in Scotland as cash buyers. There was no deposit to pay, as such, the full price was paid on completion day. I informally discussed funds with my solicitor before she made the offer, no proof required at that point but I did have all the money in a single bank account ready to go. Once the offer was was accepted we had to prove where all the money had come from. We went from offer to completion in less than two months. In Scotland there is no going back once the missives are done, if you don't have the funds on the agreed date, there is a penalty for not completing (10%?) so it is vital to be sure you will have the money.

Chemenger can you remind me again at which point in the process missives complete? I've been in this house the best part of a decade so can't remember from when we moved in here

I an no expert, because our purchase was so fast everything seemed to happen at once! You make the offer, it’s accepted then the contracts get drawn up with the dates etc - these are the missives. When these are signed the price and the completion date are fixed. This was less than 2 weeks after the offer for us. This was a very simple purchase - an empty property and we were not moving in straight away. Any negotiations about dates, fixtures etc would slow this down. My solicitor did say that at the moment they expect purchaser’s sales to be agreed before offering on properties, bridging loans are “a thing of the past”, apparently. I imagine this makes setting completion dates complicated for everyone.

Thanks Chemenger. I suppose on the flipside things may move quickly with missives etc on MILs house, its likely to be developers who show the most interest in it, she lived in it since 1976 and it shows! EA seemed confident that as long as the survey doesn't throw up any nasty surprises then it'll probably go to bids at closing date, as has been happening with similar properties in recent years in this area.

Yes, that sale could be done quickly if your buyers don’t need a particular entry date.