Top tips to make sure your mortgage application isn’t delayed by suspicion of money laundering


The sad news is that mortgage fraud is on the rise in the UK which can cause a huge headache for the vast majority of honest home hunters who, without their being responsible for their part , triggered an alarm signal upon their request.

Mortgage loan fraud occurs when someone provides false or altered documents in support of a mortgage loan application.

Research found that fraudulent mortgage applications increased by 5% in 2019, as 13% of UK adults believe it is ‘reasonable’ to overstate income on a mortgage application.

With that in mind, experts at the anti-money laundering service, SmartSearch, reveal some of the biggest considerations for Brits when it comes to mortgage applications.

1: Gifted deposits

If you are fortunate enough to receive help from family or friends in the form of a deposit as a gift towards the purchase of your home, there are a few considerations that you should keep in mind. Lenders and lawyers will always question the source of your deposit, so it’s important to explain to your mortgage advisor up front where exactly the money is coming from.

This is especially true in the case of offered deposits, as large amounts transferred to an account are flagged as unusual activity and may warrant anti-money laundering investigations or hinder your mortgage application.

Providing proof that your deposit is a gift, not a loan, is also an important step to consider. It can be a letter or signed document stating that the deposit is a gift, which is usually enough to satisfy lenders. The signed document should clearly state that the deposit is not a loan and does not need to be repaid. In addition, it should also state that the gift does not grant your friend or family member any rights to the property. Your mortgage advisor can provide you with a sample document if in doubt.

2: Estate and personal savings deposits

The most common source of deposit for a home is personal savings or inheritance. Both of these sources of financing should be accepted by mortgage lenders without any problem. However, additional checks may be needed to clarify the source of the money, so make sure that you can prove your right to inheritance and that there are documentation outlining exactly where the money is coming from and where it is. has been since you claimed it. .

Lenders very rarely require additional checks for personal savings, but if you’ve had significant salary changes that have helped to contribute to your savings, it may be helpful to have older payslips on hand to help you. check your past income.

3: Credit card deposits

Credit card fraud accounts for 39% of identity fraud cases in the UK2, with the main focus of the activity being to buy goods without paying or to steal money from the credit account of someone else. The most common types of credit fraud are lost or stolen credit cards used without the owner’s permission, skimmed credit cards, theft of credit card details, and fraudulent claims on someone’s behalf. other.

With that in mind, it’s no surprise that credit cards are generally not accepted by mortgage lenders as they are unsecured and high-risk loans. Using a credit card as part of your deposit is likely to have your application rejected and slow you down in terms of securing your home.

4: Register on the electoral list

Lenders must be able to verify your identity for anti-money laundering purposes. Getting on the voters list helps prove your identity and make sure you are who you say you are, as it allows lenders to verify your information and confirm your name, address and residential history.

If you are not registered to vote, getting a mortgage is next to impossible because banks and real estate companies need to know that your information is up to date. Therefore, it is important to make sure that you are registered before applying.

5: Dissociate ex-partners

When you take out loans or bank accounts with another person, usually a partner, you become financially tied to them and their activity can impact your credit score and the way lenders view you. This makes it more difficult for those reviewing your claim to assign you certain spending patterns and may arouse suspicion if there are irregularities.

If you think you are still financially linked to an ex-partner, contact the credit bureaus and explain the situation to them, they can dissociate you from your ex-partner.

John dobson, CEO of SmartSearch, says, “Applying for a mortgage can be an exciting and daunting task, as many first-time buyers don’t know what to expect during the rigorous application process.

“It is important to remember that a mortgage is a significant financial commitment, and that exaggerations or withholding any change in circumstances can result in a money laundering and fraud investigation, making it more difficult to obtain credit. ‘a mortgage or other financial products in the future.

“We hope that by revealing some of the most important considerations for mortgage applications, you will have the knowledge you need to easily get a mortgage. “

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