Gifted Deposit Mortgages: Rules, Letters and Lender Requirements
For a lot of first-time buyers, a gifted deposit from family is what makes the numbers work. Most lenders are used to it, but the rules are stricter than many people expect, the money has to be a genuine gift rather than a loan, and lender criteria vary on who’s allowed to give it and how much has to come from you.
Here, we break down what counts as a gifted deposit, who can gift, what lenders need to see, and the small paperwork points that can hold up an application.
What counts as a gifted deposit, and how is it different from a loan?
A gifted deposit is money given to you for a house purchase with no strings attached. The lender needs to see that there’s no intention for you to pay it back, no interest being charged, and no ongoing claim on the property.
The main exception is that some lenders are happy for the person gifting the money to also live in the property alongside you, a parent gifting a deposit and then residing in the home, for example. That’s not universal, but it’s possible with some lenders.
If it’s the case that the money is being given and the family member does expect to be paid back, some lenders will still consider the case, but they’ll treat it as a loan, which means it gets pulled into your affordability calculation as a monthly outgoing, reducing what you can borrow.
Who can gift a mortgage deposit?
Most lenders will accept a gifted deposit from immediate family. That typically covers parents, grandparents, brothers and sisters, and people within that close family circle.
It’s not to say people outside immediate family can’t gift you a deposit, some lenders take a wider view, but your lender options narrow significantly once you step outside close family.
Do lenders have different rules about who they’ll accept a gift from?
Yes. Every lender’s ruling on gifted deposits is slightly different, and they’ll want to see slightly different things.
The general rule of thumb is that if it’s immediate family, it’s typically just a case of the gifter confirming, via a signed letter, that they have no interest in the property and don’t expect the money back.
Where the variation shows up is around definitions. Some lenders won’t class an aunt or uncle as immediate family; others will. Some will accept step-parents, in-laws, adopted children and partners; others draw a tighter line. If your gifter sits outside the clearly defined “immediate family” circle, it’s worth speaking to a broker before you get too far into the process, to make sure the lenders you’re aiming at will accept the gift.
Can your entire deposit be gifted, or do you need your own money too?
| Residential mortgages: The full deposit can usually come from an immediate family member. If they've got 10% they want to gift you, that's fine to make up your full deposit with most residential lenders. | |
| Buy-to-let mortgages: These are slightly different. BTL lenders typically want some of your own funds in the deposit, though some will apply the same rules as residential. | |
| New build: This is where it gets more specific. Some lenders don't count a gift as your own money on a new build, and will set a minimum of 5% that has to come from your own source, meaning your own savings or money you've obtained yourself, not a gift. | |
How much do gifted deposit rules vary between lenders?
This will vary slightly depending on the broker’s compliance requirements, but the standard package is:
- Three months of the gifter’s bank statements, or evidence of where the money has been obtained
- A signed letter from the gifter, confirming that the money is a gift with no expectation of repayment, no interest being charged, and no interest in the property
Some lenders will ask for six months of statements rather than three, particularly if the funds have moved between accounts or arrived in the gifter’s account recently.
Why do lenders require a gifted deposit letter?
The gifted deposit letter is essentially the gifter signing an agreement to say: I’m giving this money, I’m not expecting it back, and I’m not going to try to enforce repayment or claim an interest in the property.
Without that letter, the gifter could theoretically turn around on day one, claim the money wasn’t a gift, and demand repayment, or claim a stake in the property itself. That’s a real risk for the lender, especially in the event of repossession further down the line, because someone claiming an interest in the property makes the legal position much more complicated.
The letter is the lender’s protection. The gifter is waiving those rights, in writing, before the mortgage completes.
What if the gift comes from someone living abroad?
Overseas gifts change what’s available. Some lenders will simply not accept funds coming from certain countries, or will require that the money originated in the UK. Others are more flexible.
The evidence you’ll need to provide is broadly similar, proof of where the money originated, bank statements showing it’s available, but overseas cases tend to attract stricter underwriting. Lenders that will accept overseas gifts often ask more questions about the source of funds and want more documentation to back it up.
Is inherited money treated the same as a gifted deposit?
No. Inheritance is treated completely differently. Lenders don’t view inherited money as a gift, they treat it as your own money at that point.
The documentation is different too. What lenders will typically want to see is a letter from the solicitor confirming that the money is owed to you from the will, or that it’s already been paid from the estate. If the funds are already in your account, they’ll usually want to see it landing on your bank statement. If it hasn’t been paid yet, the solicitor’s letter will usually do the job on its own.
Either way, the paperwork tends to be on headed paper from the solicitor handling the estate, confirming that the funds have come from a will.
Common mistakes to avoid with a gifted deposit
There isn’t a real “common mistake” that’s unique to gifted deposits, the same rules apply as with savings generally. The main friction point is money movement.
Moving the funds around a lot of different accounts, either by the gifter or by you, makes the paper trail messy. Lenders and solicitors both need a clear source of funds trail for anti-money-laundering checks. If the money has bounced between multiple accounts over a long period, the lender may end up requesting a very long list of bank statements to follow it.
Sending funds to the gifter and back, this can happen when a purchase falls through, the money is returned, then gifted again for a new purchase. Lenders can get uncomfortable when they see funds moving from the gifter’s account to the giftee’s account and back more than once. It isn’t necessarily a mistake, but it generates more underwriting work and can delay the mortgage offer.
What to check before relying on a gifted deposit
The main thing to check is whether the person gifting the money will actually be accepted by the lenders you’re targeting.
If your gifter is outside the standard immediate family definition, a friend, a cousin, an aunt or uncle depending on the lender, it’s worth speaking to a broker to confirm there’s a lender who’ll accept the gift, before you get offer-accepted on a property. Otherwise you can find yourself with a 15%, 10% or 5% gifted deposit that no lender will let you use.
It’s also worth thinking about the wider picture. Even if the gift itself is fine, other criteria, your income, credit commitments, affordability, time in the UK, visa status, all need to line up with a lender who accepts your gifter. Sometimes lenders are fine on the gifting side but not on the rest of the case, and vice versa. Getting all of that checked before you set your heart on a home saves a lot of time and stress.
This article is general information, not personal financial advice.
FAQs
Can a friend give me a gifted deposit?
Some lenders will accept a gift from a friend, but options are much more limited than they are for immediate family. If your gifter is a friend, it's worth speaking to a broker before you make an offer, so you know which lenders will accept the case.
Can the person selling the property gift me the deposit?
Most lenders won't accept a gifted deposit from the person selling the property. Where a discount is given by the vendor, it's usually treated as a price reduction rather than a gifted deposit, and it has to be disclosed to the lender on the standard forms.
Do gifted deposits affect first-time buyer stamp duty relief?
No. Using a gifted deposit doesn't stop you from being a first-time buyer for stamp duty purposes, provided you meet the usual criteria (no previous property ownership anywhere in the world). The gift is treated the same as your own savings.
Are there tax implications for the person gifting the money?
There can be. Gifts of money are generally free of tax at the point of giving, but there are potential inheritance tax implications if the gifter dies within seven years of making a large gift. It's worth the gifter taking their own tax advice if the amount is significant.
Does the gifter's name go on the mortgage or the property?
No. The whole point of a gifted deposit is that the gifter has no interest in the property or the mortgage. The signed gift letter is the confirmation of that.
Can I use inheritance and a gifted deposit together?
Yes. Lenders will treat the two as separate sources of funds. You'll need solicitor confirmation for the inheritance and a signed letter for the gifted portion, and you'll need to evidence both sources through your bank statements.