MORTGAGE GUIDANCE
Gifted deposits for mortgages: what you need to know
Family members or others may sometimes provide money towards a home deposit, but lenders and conveyancers will normally need to understand where the money has come from and the terms on which it is being provided.
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What is a gifted deposit?
A gifted deposit is money provided towards a property purchase without the normal expectation that it will be repaid. This is different from a loaned deposit, which is money expected to be repaid. The distinction matters because lenders may assess the two differently.
Gifted deposit
Money genuinely being given to the buyer.
Loaned deposit
Money expected to be repaid.
Who can gift a mortgage deposit?
Lender criteria vary and not every lender accepts gifts from every category.
Parents
Grandparents
Other relatives
Partners
Other individuals in circumstances acceptable to the lender
What evidence might be required?
Requirements vary between lenders, conveyancers and circumstances. Anti-money-laundering and source-of-funds checks may also apply.
Giver’s identity and relationship to the buyer
Amount being gifted and confirmation repayment is not expected
Confirmation of any interest in the property
Source-of-funds evidence, bank statements or other support where required
What is a gifted deposit letter?
Lenders may require written confirmation of the gift and its terms. They may ask for details about the giver, amount, source of funds, repayment expectation and any interest in the property. One standard letter will not necessarily meet every lender’s requirements.
Does a gifted deposit affect how much I can borrow?
Having a gifted deposit does not by itself determine mortgage affordability. Lenders can separately assess income, expenditure, commitments, credit history, property, deposit or loan-to-value and other circumstances.
Can the whole deposit be gifted?
Some lenders may accept a wholly gifted deposit while others can apply different criteria depending on the mortgage and circumstances.
Gift
Normally provided without an expectation of repayment.
Loan
Creates an obligation to repay and may therefore affect how a lender assesses the application. Legal advice may be appropriate for formal ownership rights, charges or repayment agreements.
What if the person gifting the money wants an interest in the property?
This is different from a straightforward unconditional gift and can affect the mortgage and legal arrangements. The lender and conveyancer should be made aware of the true arrangement.
Gifted deposits and first-time buyers
Gifted deposits are commonly relevant to first-time buyers, but they are not restricted to first-time buyers. Money received through an inheritance may also be used towards a property purchase, subject to evidence, source-of-funds requirements and lender criteria.
Can a mortgage adviser help with a gifted deposit?
An adviser can help establish which lenders may consider the proposed deposit arrangement and what mortgage requirements may apply within the scope of their service. Advice does not guarantee mortgage acceptance.
Frequently asked questions
What is a gifted mortgage deposit?
Can my parents give me my mortgage deposit?
Can my entire mortgage deposit be gifted?
Does a gifted deposit need to be repaid?
What proof is needed for a gifted deposit?
Can someone who is not family gift me a deposit?
Does a gifted deposit affect mortgage affordability?
Using a gifted deposit to buy a home?
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