A conveyancer asks for your source of funds because they need to understand where the money being used for your property transaction has actually come from. This forms an important part of the anti-money laundering checks carried out during conveyancing.
It is not enough for the money simply to appear in your bank account. Your conveyancer may need evidence showing how the funds were accumulated or received, whether through savings, employment income, inheritance, investments, the sale of another property or a gift from a family member.
These checks are a normal part of buying a property in England and Wales and do not mean that your solicitor suspects you of doing anything wrong.
What Does Source of Funds Mean?
Source of funds means the origin of the specific money you are using for a transaction.
For example, if you are contributing £50,000 towards a house purchase, your conveyancer may need to establish how you obtained that £50,000.
It could have come from:
- Savings built up from your salary.
- The sale of another property.
- An inheritance.
- A gifted deposit.
- Investments that you have sold.
- The sale of another asset.
- Business income.
- A combination of several sources.
Simply showing that £50,000 is sitting in a bank account may not be enough.
The conveyancer may need to follow the trail backwards to understand how the money reached the account in the first place.
Why Do Conveyancers Carry Out Source of Funds Checks?
Property transactions involve substantial sums of money, which makes the property market attractive to people attempting to disguise the proceeds of crime.
Solicitors therefore have obligations under UK anti-money laundering legislation and professional regulations.
Source-of-funds checks help us establish that the money being used in a transaction has a legitimate origin and is consistent with what we know about the client and the transaction.
When we handle the conveyancing process, these checks form part of the wider due diligence that takes place before money can be transferred and the transaction completed.
They also help protect:
- Our clients.
- The property transaction.
- Mortgage lenders.
- Our firm.
- The wider financial and legal system.
Is Source of Funds the Same as Proof of Funds?
No. Although the terms are sometimes used interchangeably, they answer different questions.
Proof of funds shows that you have enough money available to complete the purchase.
Source of funds explains where that money came from.
For example, a bank statement showing £75,000 in your account demonstrates that the money exists.
Your conveyancer may then ask how you accumulated the £75,000.
If it came from savings, they may want to see evidence showing those savings building over time.
If it arrived as one large payment, they may ask for documentation explaining that payment.
| Check | Main Question |
|---|---|
| Proof of funds | Do you have enough money for the transaction? |
| Source of funds | Where did that specific money come from? |
| Source of wealth | How did you accumulate your overall wealth? |
Understanding this distinction can make the document requests you receive during conveyancing much easier to understand.
What Is the Difference Between Source of Funds and Source of Wealth?
Source of funds relates to the particular money being used in the transaction.
Source of wealth is broader. It concerns how someone accumulated their overall wealth or financial position.
For example, imagine someone is buying a property for £500,000 in cash.
Their source of funds might be £500,000 transferred from an investment account.
Their source of wealth could be a combination of:
- Employment income accumulated over many years.
- Business ownership.
- Property investments.
- An inheritance.
- Investment growth.
A conveyancer may need additional information about source of wealth depending on the circumstances and level of risk involved in the transaction.
Why Isn’t a Bank Statement Enough?
A bank statement tells us where the money is currently held. It does not necessarily explain how it was obtained.
Imagine £80,000 arrives in your account two weeks before you buy a property.
A bank statement confirms that the £80,000 exists, but it does not tell us whether it came from:
- Your accumulated savings.
- Another bank account you own.
- An inheritance.
- A family member.
- An investment sale.
- The sale of an asset.
- A loan.
- Something else entirely.
Your conveyancer may therefore ask for documents showing the history behind the payment.
The purpose is to create a clear and reasonable audit trail from the original source of the money through to the funds being used for the property purchase.
What Documents Will a Conveyancer Ask For?
The documents required depend on where your money has come from.
There is no single set of paperwork that applies to every buyer.
We may request different evidence depending on whether your purchase is funded by savings, a gift, an inheritance, investments or another source.
If the Deposit Comes From Personal Savings
If you have gradually saved your deposit from employment income, your conveyancer may ask for bank statements covering an appropriate period.
They may also request supporting evidence such as:
- Payslips.
- Savings account statements.
- Current account statements.
- Evidence of transfers between your own accounts.
What matters is that the financial history makes sense.
For example, regular monthly transfers from your salary account into a savings account over several years provide a different audit trail from £50,000 appearing in the account shortly before the purchase.
There is no universal rule requiring every buyer to provide the same number of months of statements. The amount and type of evidence required will depend on the circumstances.
What Happens With a Gifted Deposit?
A gifted deposit is money given to you by another person towards your property purchase.
Parents and other family members commonly help buyers in this way.
Where somebody else is contributing money, your conveyancer may need information about both the gift and the person providing it.
This could include:
- A signed gifted deposit declaration or letter.
- Identification from the person providing the gift.
- Proof of their address.
- Their bank statements.
- Evidence showing where they obtained the money.
- Confirmation that the money is a genuine gift rather than a loan.
- Confirmation of whether they expect any legal interest in the property.
Your mortgage lender may also have its own requirements concerning gifted deposits.
This is particularly relevant for buyers who have followed our first-time buyer tips and are receiving family assistance to get onto the property ladder.
What If the Money Comes From an Inheritance?
Inheritance money can normally be used towards a property purchase, but evidence may be required to establish where it came from.
Depending on the circumstances, you could be asked for:
- Estate documentation.
- Correspondence from the executor or solicitor dealing with the estate.
- Probate documentation where applicable.
- Bank statements showing receipt of the inheritance.
- Evidence identifying the estate from which the money originated.
If the inheritance was received several years ago and has subsequently been held in savings or investments, additional documentation may be needed to demonstrate how the funds have moved.
What If the Money Comes From Selling Another Property?
If your deposit or purchase money comes from selling another property, the audit trail will usually relate back to that sale.
Evidence could include:
- A completion statement.
- Correspondence relating to the property sale.
- Bank statements showing receipt of the proceeds.
- Information about the property that was sold.
Where your sale and purchase are happening at the same time, your conveyancer may already be dealing with both transactions.
When you are buying a property, the proceeds from an existing home can therefore form an important part of the money used for your onward purchase.
What If the Money Comes From Shares or Investments?
Money released from investments may also require an audit trail.
You might be asked for:
- Investment account statements.
- Broker statements.
- Evidence of the investment sale.
- Dividend documentation where relevant.
- Bank statements showing the proceeds being transferred into your account.
If the investment itself was funded by a substantial recent payment, your conveyancer may need to ask further questions about how that money was originally obtained.
What If the Money Comes From the Sale of an Asset?
You may have raised funds by selling something valuable.
Examples could include:
- A vehicle.
- Land.
- A business.
- Company shares.
- Valuable personal assets.
Depending on the amount involved, your conveyancer may ask for evidence of ownership, the sale and receipt of the money.
The evidence should provide a logical explanation for the funds entering your account.
What If My Money Has Moved Between Several Bank Accounts?
This is common and does not automatically cause a problem.
Many people spread their savings across:
- Current accounts.
- Savings accounts.
- ISAs.
- Investment accounts.
- Fixed-term savings products.
The important point is being able to demonstrate the trail.
For example:
Savings account A → Current account B → Solicitor’s client account
Your conveyancer may ask for statements from both accounts so the transfer can be followed from one to the other.
If money has been transferred several times, more statements may be needed.
Why Does My Conveyancer Need So Many Bank Statements?
The number of statements requested will depend on the transaction.
Your conveyancer is not simply interested in the final account balance.
They may be looking for evidence showing:
- Savings accumulating over time.
- Regular employment income.
- Large one-off payments.
- Transfers between accounts.
- Gifts from third parties.
- Investment proceeds.
- Property sale proceeds.
- Transactions that need further explanation.
Where the source is simple and clearly documented, the process can be relatively straightforward.
Where substantial funds have moved through several accounts or come from several different sources, more documentation may be required.
Will My Conveyancer Question Large Bank Transfers?
Potentially.
A large or unusual transaction does not automatically mean anything is wrong.
However, your conveyancer may need to understand it.
For example, if your bank statement normally shows a few thousand pounds but suddenly receives £60,000, we may need to establish where that payment came from.
The explanation might be completely straightforward, such as:
- An inheritance.
- A matured investment.
- A property sale.
- A family gift.
- A transfer from another account you own.
Providing the supporting evidence promptly helps the conveyancing process continue.
What If My Deposit Comes From Several Sources?
That is also common.
Your deposit could, for example, consist of:
- £25,000 from personal savings.
- £15,000 gifted by your parents.
- £10,000 from investments.
Your conveyancer may need evidence for each part.
Rather than treating the £50,000 as one sum, the audit trail might therefore look like:
| Source | Amount | Possible Evidence |
|---|---|---|
| Personal savings | £25,000 | Bank statements and evidence of accumulated savings |
| Family gift | £15,000 | Gift declaration, donor ID and evidence of donor’s funds |
| Investments | £10,000 | Investment statements and evidence of sale |
Using several funding sources is not necessarily a problem. It simply means there may be several audit trails to document.
Do Cash Buyers Still Need Source of Funds Checks?
Yes.
Buying without a mortgage does not remove the requirement for appropriate anti-money laundering checks.
In fact, a large cash-funded property purchase can require particularly clear evidence explaining where the money has come from.
A cash buyer may need to establish the source of the full purchase price rather than only the deposit and associated costs.
Does Having a Mortgage Remove the Need for Source of Funds Checks?
No.
If you are purchasing with a mortgage, the lender provides part of the purchase price, but you still need to account for your own contribution.
For example, if you buy a £300,000 property using:
- A £250,000 mortgage.
- A £50,000 deposit.
Your conveyancer may need to establish the source of the £50,000.
There may also be additional amounts to account for, such as property transaction costs.
When Will I Be Asked for Source of Funds?
It is best to deal with these checks early.
Once your offer has been accepted, several parts of the transaction begin progressing at the same time.
Our guide explaining what happens after your offer on a house is accepted includes providing identification and funding evidence among the important early steps.
Providing source-of-funds information promptly means questions can be dealt with before you reach the later stages of the transaction.
Leaving it until shortly before exchange or completion could cause avoidable delays.
Can Source of Funds Checks Delay Conveyancing?
They can if the required information is incomplete or difficult to verify.
Common causes of delay include:
- Not providing requested bank statements.
- Large unexplained deposits.
- Money moving through numerous accounts.
- Gifts arriving without supporting documentation.
- Funds arriving from somebody not previously mentioned.
- Difficulty obtaining evidence of an inheritance.
- Overseas funds requiring additional investigation.
- The funding arrangements changing during the transaction.
Responding promptly and explaining unusual transactions clearly can make the process much easier.
What Happens If My Source of Funds Changes?
Tell your conveyancer as soon as possible.
For example, you might originally intend to use £40,000 of personal savings but later decide that £15,000 will come from your parents instead.
That is a material change to the source of the purchase funds.
Your conveyancer may then need information from the person providing the gift and, where you have a mortgage, the lender may also need to know.
Do not wait until immediately before exchange to mention a change in funding.
What Happens If Someone Else Is Paying Part of the Purchase Price?
Tell your conveyancer at the beginning of the transaction.
Money supplied by another person can raise additional questions about:
- Where the money came from.
- Whether it is a gift or loan.
- Whether the contributor expects repayment.
- Whether they expect an ownership interest.
- Whether the mortgage lender needs to approve the arrangement.
The contributor may also need to provide identification and source-of-funds evidence.
This applies even where the person providing the money is a close family member.
Can I Use Borrowed Money for My Deposit?
You should disclose any borrowed funds to your conveyancer and mortgage lender.
A loan is not the same as a gift.
A mortgage lender may take existing borrowing into account when assessing affordability and may have rules about whether borrowed funds can be used towards the deposit.
Trying to describe a loan as a gift can create serious problems.
The safest approach is to explain the funding arrangement accurately from the outset.
What About Money From Overseas?
Overseas funds can be used in a property transaction, but additional checks may be necessary.
Your conveyancer may need to understand:
- Which country the money came from.
- Which account held the funds.
- How the funds were generated.
- Who owns the account.
- How the money was transferred to the UK.
- Whether additional documentation is required.
Documents from overseas may also require further verification or translation depending on the circumstances.
If overseas money will form part of your purchase funds, tell your conveyancer early rather than transferring it shortly before completion without warning.
What If I Cannot Prove Where the Money Came From?
Speak to your conveyancer as early as possible.
Older funds can sometimes be more difficult to document, particularly where money has been held for many years or moved between several accounts.
Your conveyancer can explain what alternative evidence may be appropriate.
However, if we cannot satisfactorily complete the checks required for the transaction, we may be unable to continue acting or receive the money.
This is why it is important not to dismiss requests for source-of-funds information as unnecessary paperwork.
Does My Conveyancer Report My Financial Information?
Information provided to your solicitor is subject to professional confidentiality obligations, although there are circumstances in which the law may require action or disclosure.
Anti-money laundering legislation places obligations on legal professionals where suspicious activity is identified.
Your conveyancer may not always be able to explain whether a particular report or investigation is taking place.
For most buyers, however, source-of-funds checks are simply a routine part of the conveyancing process.
How Can You Make Source of Funds Checks Easier?
Preparation makes a significant difference.
We recommend:
- Keeping savings records organised.
- Avoiding unnecessary movement of your deposit between accounts.
- Telling us about gifted money at the beginning.
- Keeping paperwork relating to an inheritance or asset sale.
- Retaining investment statements.
- Explaining any large transactions clearly.
- Telling us before your funding arrangements change.
- Providing complete statements rather than screenshots of individual balances.
- Responding promptly when further evidence is requested.
If you know that your funding arrangements are complicated, raise them early.
It is usually much easier to resolve a question several weeks before exchange than several days before completion.
Source of Funds Checks When Buying in Reading
The same anti-money laundering requirements apply whether you are buying locally or elsewhere in England and Wales.
For clients purchasing locally, our conveyancing solicitors in Reading can guide you through the funding, legal and practical requirements of your property transaction.
Giving us clear information about your deposit and purchase funds early helps us identify what evidence will be required and deal with potential questions before they affect the later stages of the purchase.
Frequently Asked Questions
Why is my solicitor asking where my deposit came from?
Your solicitor needs to understand the origin of the funds being used in the transaction as part of the required anti-money laundering and due diligence checks.
How many months of bank statements will I need?
There is no universal number that applies to every transaction. The period requested depends on how the money was accumulated, the transaction and the level of evidence required to establish a clear source.
Do my parents need to provide bank statements for a gifted deposit?
They may be asked to provide statements and other evidence showing where the gifted money came from, alongside identification and confirmation of the nature of the gift.
Why does my solicitor need to know where inherited money came from?
Although inheritance is a legitimate source of funds, your solicitor may still need documentation establishing the link between the estate, the payment you received and the money being used for your purchase.
Can I refuse to provide source-of-funds documents?
You can decide not to provide requested information, but your solicitor may then be unable to proceed with the transaction if the necessary checks cannot be completed.
Will transferring money between my own accounts cause a problem?
Not necessarily. You may simply need to provide statements showing the movement between the accounts so the audit trail can be followed.
Do I need source-of-funds evidence if I am buying without a mortgage?
Yes. A cash purchase still requires appropriate source-of-funds and anti-money laundering checks.
Does my mortgage lender carry out the same checks?
Mortgage lenders carry out their own financial, identity and compliance checks. Your conveyancer also has separate professional and legal responsibilities and cannot simply rely on the fact that a lender has approved your mortgage.
Should I send my deposit to my solicitor before being asked?
No. Follow the payment instructions given by your conveyancer and verify bank details carefully before transferring substantial sums.
Can source-of-funds checks continue during the transaction?
Yes. Your conveyancer may need further information if the source of the money changes or if transactions identified later require clarification.
Why Source of Funds Checks Matter
Source-of-funds checks are not intended to make buying a home unnecessarily difficult. They are an important part of ensuring that property transactions are not used to move or disguise criminal money.
For most buyers, the process is straightforward when the paperwork is organised and the source of the deposit can be clearly demonstrated.
The important thing is to be open with your conveyancer from the beginning.
Tell us where your money is coming from, provide the evidence requested and let us know immediately if the funding arrangements change.
If you are buying a property, we can guide you through the source-of-funds requirements alongside the rest of your conveyancing, helping you understand what documentation is required and why.
