LEGAL
Buying a home is an exciting milestone, but the legal steps involved can feel overwhelming. One of the first things your solicitor must do is verify your identity and confirm the source of the funds you are using to buy the property.These checks are required by law under anti-money laundering regulations, including the Proceeds of Crime Act 2002. Bevin Woby, Director at Shared Direction Conveyancing, explains Understanding ID Checks and Source-of-Funds Requirements
Gifted deposits are common, but full transparency is essential to show that no hidden loans or financial interests are involved.
solicitors must carry out additional checks. You will need to provide: The country from which the funds are coming Documents showing the source and movement of the money Certified translations of any non- English documents. Some jurisdictions carry higher anti-money laundering risks, so further verification may be required. If your deposit is made up of multiple sources such as savings, gifts, or overseas funds each component must be checked separately. PROVING YOUR IDENTITY Alongside source-of-funds checks, your solicitor must verify your identity. You’ll typically need: Photographic identification, such as a passport, driving licence, national ID card or residence permit
Although the rules are not rigidly prescriptive, solicitors must take
reasonable steps to understand where your money is coming from. This applies whether your funds are savings, a gift, a private loan, or coming from overseas. Having the right documents ready early on can help avoid delays later in the conveyancing process. 1. USING YOUR OWN SAVINGS If you are using savings for your deposit or purchase price, your solicitor will need: Bank statements showing the accumulation and current balance of the funds An explanation of how your savings were built up – for example, regular saving, inheritance, proceeds from a previous property sale, or from a divorce settlement Supporting documents where relevant, such as a grant of probate or a completion statement from a prior sale.
3. BORROWING MONEY PRIVATELY
If part of your contribution is borrowed from a friend, family member or private lender, your solicitor must tell your mortgage lender. This is because: Undeclared loans can affect the lender’s assessment of your financial position Lenders may need to approve the loan and require formal documentation. If you are buying without a mortgage, your solicitor will still need details of the loan, including repayment terms and the lender’s identity.
4. FUNDS COMING FROM OVERSEAS
Proof of address, such as a recent utility bill, a council tax bill or a mortgage statement.
These checks allow your solicitor to establish a clear, traceable financial picture.
When money originates outside the UK,
2. RECEIVING A GIFT FROM A THIRD PARTY If a family member or another individual is gifting you money, you’ll be asked for: A signed and dated gift letter for your mortgage lender confirming: The property address The amount being gifted The donor’s relationship to you That the gift is non-repayable That the donor will not have any interest in the property Evidence showing how the donor obtained the funds, such as bank statements or proof of savings.
These requirements help protect you and your solicitor from fraud.
WHY EARLY VERIFICATION IS IMPORTANT Your solicitor cannot proceed to exchange contracts until all identity and source of funds checks are completed. Providing accurate information and supporting documentation at the earliest stage helps keep the transaction on track and reduces the chance of delays.
For further information visit sdc-legal.co.uk or for an instant quotation call 0808 273 0273
82 First Time Buyer April/May 2026
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