Heron Financial arranged a £340,000 mortgage at 80% LTV for two joint applicants in Kent, one working in public sector operations, the other in a skilled trade, purchasing a £425,000 three-bedroom semi-detached new-build house. The £85,000 deposit combined a £63,000 inheritance with a £21,000 builder gifted deposit on top. Heron Financial placed the case with Barclays on a fixed rate, and the mortgage completed in May 2026.
The clients
The clients were a couple in Kent, buying a three-bedroom semi-detached new-build house together. One applicant works in public sector operations; the other in a skilled trade. They had received an inheritance of £63,000, and the housebuilder was offering a 5% gifted deposit (£21,000) as part of the new-build purchase incentive, meaning the total deposit on the £425,000 purchase came to £85,000, or 20%.
They came to Heron Financial wanting clarity on how lenders would treat the combination. Inheritance on its own is straightforward. A builder gifted deposit on its own is straightforward. The question was whether placing the case with the right lender would let them stack both cleanly, land at 80% LTV against the full purchase price, and access mainstream high-street pricing.
The case at a glance
- Buyers: Joint applicants, employed
- Nationality: British
- Occupations: Public sector operations role + skilled trades role
- Property type: Three-bedroom semi-detached new-build house
- Location: Kent
- Purchase price: £425,000
- Deposit: £85,000 total, £63,000 inheritance + £21,000 builder gifted deposit (20%)
- Loan amount: £340,000
- LTV: 80%
- Lender: Barclays
- Repayment method: Capital and interest
- Scheme / incentive: Builder gifted deposit (new-build incentive)
- Completion: May 2026
The challenge
The case looks comfortable on the surface, and at 80% LTV it largely was, but three things needed handling cleanly for the maths to hold.
Builder gifted deposit treatment. Lenders treat new-build builder incentives differently. Some count the gifted contribution towards the deposit at face value, meaning LTV is calculated against the full £425,000 purchase price. Others deduct the gift from the purchase price and recalculate LTV against the lower figure, which would have pushed this case above 80% LTV and into a worse pricing tier. Lender choice mattered specifically because the 80% LTV outcome, and the rate that came with it, depended on the right treatment of the gift.
Multi-source deposit documentation. Two deposit sources means two sets of evidence: the inheritance needed evidencing through probate documentation, executor’s correspondence and the bank trail showing funds arriving in the client’s account; the builder gift needed disclosing with the standard new-build incentive paperwork. Both done together is normal, both done sloppily is where underwriting slows down.
Joint affordability on two PAYE incomes. A £340,000 loan on standard 4.5x lending implies combined income of c.£75k+. Public sector and skilled trades income are both treated cleanly by mainstream lenders, though both can include variable elements (shift allowances, on-call, overtime) that affect the affordability outcome depending on the lender’s approach.
New-build at this value. £425,000 sits comfortably within mainstream new-build lender criteria. Lease and warranty (NHBC or equivalent) needed to be in order, but the property profile didn’t itself add complication.
How Heron Financial approached the recommendation
The Heron adviser focused on lender fit for the multi-source deposit structure, then affordability, then product choice.
Lender mapping for the deposit structure. Heron Financial narrowed the panel to lenders that count builder gifted deposits towards the deposit at face value, so the case held at 80% LTV against the full purchase price. This is the most important technical point on a new-build with builder incentive, the wrong lender choice quietly turns an 80% LTV case into an 85% LTV one and changes the rate available.
Inheritance documentation up front. The £63,000 inheritance was evidenced cleanly: grant of probate or letters of administration, executor correspondence, and the bank trail showing the funds arriving in the client’s account. With this prepared at application stage, underwriting didn’t pause to chase paperwork.
Joint affordability check. The adviser confirmed the £340,000 loan sat comfortably within Barclays’ affordability on the two incomes, factoring in any regular variable elements alongside basic pay.
Lender choice. Barclays was the right home for this case. Their treatment of new-build builder incentives, their clean approach to inheritance as a deposit source, and their pricing at the 80% LTV band combined to produce the strongest overall outcome.
Product choice. A fixed rate gave the clients payment certainty in the early years of the new home, particularly valuable for buyers stepping into a new-build at a meaningful loan size, where the household budget is still settling into the new commitment.
The outcome
The mortgage completed in May 2026. The clients moved into their new home with:
A £340,000 mortgage at 80% LTV against the full purchase price
A fixed rate on capital and interest repayment
Both deposit sources cleanly documented and accepted
A mainstream high-street outcome on what could have been a fiddlier case
What this means for buyers in a similar position
If you’ve recently received an inheritance and you’re buying a new-build with a builder gifted deposit on offer, the combination is genuinely workable, but only with the right lender.
The most important technical point is how the lender treats the builder gift: at face value (so the gift counts towards your deposit and LTV is calculated against the full purchase price), or by deducting it from the purchase price (which can push you into a worse LTV band). The wrong lender choice can quietly cost you a better rate.
Inheritance as a deposit source is mainstream, provided it’s documented properly. Combined together, they’re a strong deposit structure, and a broker who knows each lender’s treatment of new-build incentives is the difference between landing at 80% LTV with sharp pricing or 85% LTV with a worse one.
FAQs
Can you use inheritance as a mortgage deposit?
Yes. Inheritance is a standard, accepted source of deposit with all mainstream UK lenders. The funds need to be evidenced, typically through probate documentation, executor correspondence, and bank statements showing the money arriving in your account. There’s no LTV restriction or product limit specifically tied to inheritance as a source.
Can you combine inheritance with a builder gifted deposit?
Yes. Combining inheritance with a builder gifted deposit is a common multi-source deposit structure on new-builds. Each source needs to be documented in its own right. The most important point is how the lender treats the builder’s contribution, at face value (counts towards deposit, LTV calculated against full purchase price) or by deducting it from the purchase price (which can push you above the lender’s LTV cap).
Does a builder gifted deposit affect the LTV calculation?
It depends on the lender. Some count the builder’s gift towards the deposit at face value, so LTV is calculated against the full purchase price. Others deduct the gift from the purchase price and recalculate LTV against the lower figure, which can wipe out the LTV benefit. Lender choice matters specifically for this reason.
Do I need to pay tax on inherited money used for a deposit?
Inheritance Tax (IHT) is paid by the estate before money is distributed to beneficiaries, not by the recipient. Once funds have been received by you as a beneficiary, there’s no additional tax on using them as a mortgage deposit. Your solicitor and the lender will need evidence of where the funds came from, but no tax is triggered by the use itself.
How much deposit do you need for a £425,000 new-build house?
At 80% LTV, you’d need a 20% deposit, £85,000 on a £425,000 purchase. Some lenders cap new-build LTV at 85% (£63,000 deposit), and 90% LTV (£42,500 deposit) is available with several lenders for new-build houses, though new-build flats often face tighter LTV caps.
