Understanding Proof of Funds When Buying a Home in Scotland

When you decide to buy a home in Scotland, one of the first things your solicitor will ask for is proof/source of funds. Many buyers are surprised by this, especially if they already have a mortgage agreed in principle. However, providing proof of funds is an essential part of the Scottish conveyancing process, and there are strict regulatory requirements for solicitors to adhere to in this regard. Delays in supplying it can hold up your purchase or in severe cases result in your solicitor being forced to withdraw from acting in the matter.

This guide explains the basis of what proof of funds is, why it is required, what documents are accepted, and what happens when funds are being gifted by a family member.

 

What Does “Proof of Funds” Mean in Scottish Conveyancing?

It is evidence showing where your money to buy the property is coming from more commonly known as the origination source of wealth. Your solicitor must confirm that the funds you are using for the purchase are from a legitimate source. This applies whether you are paying the full price in cash or contributing a deposit alongside a mortgage.

It includes both your contribution and any third-party or gifted funds:  If someone else is helping you—for example, a parent providing a gifted deposit—the solicitor must also understand and verify where their money has come from as they would be doing for your funds.

 

Why Solicitors Must Request Proof of Funds

Solicitors cannot choose whether to check your funds—the law requires it. There are several strict obligations your solicitor must meet:

Anti-Money Laundering (AML) regulations:  Under UK-wide AML rules, solicitors must identify the source of a client’s money to ensure it has not come from criminal activity. Property transactions are a common target for money laundering, so checks are mandatory.

Law Society of Scotland requirements:  Scottish solicitors are professionally obliged to carry out due diligence on every purchase. If they do not check your funds properly, they risk regulatory action, fines, or being unable to act in your transaction.

Lender requirements (if you are getting a mortgage):  Most lenders require solicitors to confirm that the deposit is legitimate and not an undisclosed loan. Your solicitor must be able to evidence this before reporting to the lender and the drawing down of any loan funds.

These checks protect both you and your solicitor and help keep the transaction secure and transparent.

 

What Types of Documents Are Accepted as Proof of Funds?

The exact documents will depend on where your money is held or how it has been built up, but common examples include:

Recent bank statements:  Statements showing the balance you will be using for your deposit or purchase. These help demonstrate you are in control of the account and confirm the funds are available.

Savings account or ISA statements:  If your deposit comes from long-term savings, an ISA or similar account, statements from these accounts will be required.

Investment portfolio statements:  Where funds are held in shares, bonds, or managed investments, you can provide official statements from your investment provider.

Proof of sale of another property:  If you have recently sold a property, the completion statement from your solicitor will show the amount you received and how it came to you.

Proof of inheritance:  A copy of the will, estate accounts, or a solicitor’s letter can be used to show you received money from an estate.

Proof of divorce settlement or court award:  If funds come from a settlement or decree, the relevant legal document will be needed.  All documents must be official and legible. Screenshots from mobile banking apps are sometimes acceptable, but your solicitor may ask for PDF statements depending on your lender’s requirements.

 

Gifted Deposits and Third-Party Funds

Many buyers rely on help from family members when saving for a deposit. If any part of your purchase funds is coming from someone else, additional checks will be required.

The giftor must provide proof of identity:  Your solicitor must verify who the donor is, even if they are a close relative.

The giftor must also provide proof of funds:  Just as with your own funds, the solicitor must confirm the money being gifted has come from a legitimate source. This may include bank statements, savings statements, or documents showing how the donor acquired the funds.

A Gifted Deposit Letter will be required:  The donor must confirm in writing that the money is a genuine gift, with no expectation of repayment and no security over the property. This is almost always a lender requirement so where a mortgage is being utilised, solicitors cannot proceed without this.

Lenders will want full details:  As noted if you are part funding your purchase by way of a mortgage, the lender must be told about the gift, traditionally at application stage but solicitors must usually intimate this to the lender separately for approval. Undisclosed gifts or loans can cause delays or even invalidate a mortgage offer.

The key point is that third-party funds are treated the same way as your own—full documentation and verification are required from everyone involved.

 

When Should Buyers Provide Proof of Funds?

Proof of funds should be provided at the very start of the transaction:  Ideally, as soon as your solicitor is instructed. Waiting until missives are being negotiated can lead to unnecessary delays.

Providing proof early helps your offer move smoothly:  Sellers’ solicitors often ask whether funds have been checked before they will accept an offer. If your solicitor has already verified them, they can confirm this immediately.

Delays can jeopardise your purchase:  If you cannot supply the required documents quickly, the seller may lose confidence, or the transaction may fall behind schedule. In competitive markets, it can even weaken your negotiating position.

Lenders will not release mortgage funds until checks are complete:  Your solicitor must be satisfied before reporting to the lender. The sooner everything is provided, the sooner your mortgage can be finalised.

 

A Smooth Start Leads to a Smooth Purchase

Providing proof of funds is a standard part of buying a home in Scotland. It may feel intrusive at times, but these checks are an essential legal requirement and are carried out on every buyer. The quicker you can supply the necessary documents, the faster your solicitor can progress your purchase.

If you are unsure what documents you need, or if your deposit includes gifted or third-party funds, your solicitor will guide you through exactly what is required.

Contact us today to find out more or to start your conveyancing journey.   Please contact our experienced Residential Conveyancing Team on 01324 622 888 or contact help@randa-fa.co.uk and we would be delighted to assist.