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Original poster

How to show proof of funds if only a cash buyer upon your own sale??

59 replies

BelleBoyd · 27/01/2023 14:17

This really. EA asking for proof of funds. My property is under offer and I own outright. It’s sale covers the purchase price but how do I prove all that? Is it a case of providing my solicitors details who can confirm? Have done that. Can they confirm? Didn’t expect this as haven’t conveyanced for a long time and don’t remember being asked this before. (Was a cash buyer previously also)..

OP posts:
zippitydoda · 27/01/2023 15:24

When we were selling our mortgage free house to buy a cheaper house our estate agent said we were a cash buyer. I queried this as I didn't think so and was told I was a cash buyer because I didn't need a mortgage.

Not saying it's right, because I always said to selling EAs that I would be using cash from sale.

GoodChat · 27/01/2023 15:48

Estate agents will use different terminology to solicitors. They're the problem.

Lastqueenofscotland2 · 27/01/2023 15:57

I was in this situation and I wasn’t a cash buyer but “full cash from sale” if i remember rightly, I had an email from my solicitor confirming that I would have enough cash after my sale to purchase my new property outright

Greenfairydust · 27/01/2023 15:59

You are not a cash buyer.

Cash buyers are people with money in the bank already when they make an offer on a property and therefore who don't need to sell a property or get a mortgage.

The sale of your property could fall through tomorrow, especially if you have not even exchanged at this stage on your current home.

All you can do at the moment is ask your solicitor to confirm to the estate agent that an offer has been made on your property, the amount offered and at what stage the transaction is and that there is no mortgage that needs repaying.

EyesOnThePies · 27/01/2023 16:06

The OP is a cash buyer in EA language.

The EA and solicitors I bought through described me as a cash buyer, I.e no mortgage co involved. Cash on sale of current house. So a cash buyer but not a chain free buyer.

I ticked you say the property was not mortgaged, and the vendors EA spoke to my EA to check the offer and sale price of my house.

It is seen as preferable because there doesn’t have to be a hold up for mortgage valuation, mortgage co retentions etc.

EyesOnThePies · 27/01/2023 16:10

OP: I would describe your situation to the EA and ask them what they need as proof of funds.

A million bickering MNers may not help.

ReamsOfCheese · 27/01/2023 16:11

BelleBoyd · 27/01/2023 14:31

No a cash buyer is a mortgage free buyer not just having the cash at that moment but using cash not mortgage to buy. EA wants a mortgage agreed doc whereas I obviously don’t have one or proof of funds. Bought last property over 10 years same situation but wasn’t asked for proof of funds. Maybe this a relatively new to ask?

I just found out why we're getting so many timewasters saying they're cash buyers when they're actually not. 🤪 People don't understand really simple house buying terms.
You WILL be a cash buyer when your house is sold if there is time between that and when you buy the house. You are NOT currently a cash buyer. Because your asset is not currently cash, it is a house.
Cash buyers are chain free.
Right now you are part of a chain.

ReamsOfCheese · 27/01/2023 16:13

Also you can't show proof of funds because you don't have any right now, you have a house that's for sale.
That's why everyone is trying to tell you you're not a cash buyer.

PuzzledObserver · 27/01/2023 16:19

So my concern would be that if they have understood that you are a mortgage free buyer with funds dependent on sale of your current property, then it's a weird thing for them to ask for?

It depends whether the sale of the existing property fully covers the purchase and all associated costs, or whether OP needs to add funds to complete the deal.

We were in this position - we had a sale in progress to sitting tenants when we went to look at a showhome which was advertised as an investment opportunity. One of the first questions the marketing people asked was “will you need a mortgage?” - to which the answer was No - because the deal involved buying the showhome then immediately letting it back to the developer, which few mortgage lenders would touch.

The new house was more than we were getting for the old one, so we had to show proof of funds to demonstrate we could cover the difference, plus costs.

listsandbudgets · 27/01/2023 16:22

We have been cash buyers (property already sold money in bank)

The estate agents wanted to see a bank statement showing that we had the cash available to us.

Later in the process your solicitors ask for proof of source of funds - obviously anti money laundering.

To be a true cash buyer, you need the funds available at the time of making the offer. The estate agent will tell the seller that this is a cash offer with no chain - something the seller will take into account in accepting or otherwise. Otherwise, they might say that you're selling you're property with no chain (usually to a cash buyer or first time buyer) or that your property is under offer with chain / no chain or on the market.

However, if I was a seller, the idea that you'd not need a mortgage once your house was sold would be good news from my point of view but the possibility of your sale falling through would still be a risk.

toomuchlikemyusername · 27/01/2023 16:26

If I recall correctly, when I was in this situation I provided a copy of the letter from my bank which confirmed I had paid off the mortgage in full and I believe the EA did a land registry check to prove that no other charges were registered on the priority.

CatOnTheChair · 27/01/2023 16:38

Memorandum of sale should cover it.

We had similar conversations about "no chain" and there seemed to be 2 different versions of that. I was adamant we couldn't say "no forward chain" as if our purchase fell through, we couldn't sell. What we could do was have 2 houses for a bit - and so could split the chain.

Cupofteaforall · 27/01/2023 16:43

Aip would be a good one. Don't get put off by the sellers Estate agents it feels like everyone is judging you though. Do you have the deposit in the bank or is it going to be from the equity of the sale of your house?

Fizzadora · 27/01/2023 16:49

Why on earth don't you just ask the EA or the solicitors what they need?
They must deal with this all the time.

Johnnysgirl · 27/01/2023 16:52

BelleBoyd · 27/01/2023 14:37

Aargh I have said to them I’m in a chain! Have told EA and seller I’m in a chain! I was asking what proof of funds to give when asked. Never mind.

How can you realise you're in a chain, but not understand you're not a cash buyer?

EmmaEmerald · 27/01/2023 17:00

OP
I think you need to take a deep breath

exhale....

I was doing this about three weeks ago. I got myself in a muddle about stuff to the point I had a big nap once I did my first batch of forms!

step away, then look at it all again. You will tick the box saying your purchase is dependent on the sale of another property.

lipstickwoman · 27/01/2023 17:04

OP I simply asked my solicitor to write a simple letter stating the funds would be able once the sale of mine had completed. Gave this to the EA and all happy.

lipstickwoman · 27/01/2023 17:04

Sorry would be available

AuntieJoyce · 27/01/2023 17:09

This thread is hilarious

Download a copy of your house deed from the land registry Which will show there is no mortgage on your house.

I did this and it was perfectly acceptable

xsamix86 · 27/01/2023 17:16

If you are selling your property you will need to ask the EA who has facilitated the sale for a Memorandum of Sale. This should show your purchasers details, their solicitors details and the sale price. If the sale price then covers the full amount of the purchase this should be all you need. If you need to top up the amount via a mortgage you will need an Agreement in Principle, if it is cash funds you need to provide bank statements to prove the cash is available and also where those funds came from. Proof of Funds is used a) to ensure the property is affordable, and b) for anti money laundering and fraud purposes. You cannot proceed on a sale without providing proof of funds to a solicitor.

2bazookas · 27/01/2023 17:17

Don't panic, "proof of funds" is now a legally requirement for all large financial transactions, legislation aimed at defeating money laundering.

Your lawyer should have told you that.

2bazookas · 27/01/2023 17:28

"Cash buyer" means you already have the money in the bank to buy the new purchase outright. Without having to sell your home first.

 You are  in a chain and if one link breaks you can't afford to complete  the new purchase. Because you don't have  that much money already  in the  bank. 

You're not a cash buyer.   You're  just mortgage free, which  is not the same thing.
GoodChat · 27/01/2023 18:04

I think the OP knows what cash buyer means now...

sososooin · 27/01/2023 18:13

You just need to go onto the land registry website and pay to download your title deeds- thinks it's around £3-£4. This will then show if your house has a mortgage registered against it. Obviously if it doesn't show a mortgage, then it's clear you own the house outright and proceeds can be used for purchase. I am a solicitor and this is acceptable proof in this situation.

Greenfairydust · 27/01/2023 18:36

''@EyesOnThePies
The OP is a cash buyer in EA language.''

Again, no. She is not what any reputable EA would describe as a cash buyer to their client (the seller).

The OP currently does not have the ''cash'' to buy the house. She will become a cash buyer when/if the sale of her own home has completed and the money is in her bank account.

Cash buyers are people who don't need to wait for a sale or to get a mortgage and are using existing funds to purchase a house.

An EA telling a client that they have found them a 'cash buyer' if they are in the OP's position would be misleading.

No that relevant to the OP query in term of what needs to do to confirm the amount she will have available once she has sold, but it is annoying to read people just parroting ''she is a cash buyer''...

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