Gifted Deposit Rules: What Lenders and Solicitors Actually Ask For

Around half of the first-time buyers we help at Drummonds Finance Group have some family money in their deposit, and the proportion keeps rising as prices in areas like Oxford and Bicester stay well above the national average. Lenders are entirely comfortable with gifted deposits. What trips people up is not the gift itself but the paperwork and checks around it, which tend to arrive as a surprise partway through a purchase.

This guide explains what actually counts as a gift, who can give one, and exactly what your lender and solicitor will want to see, so you can have it all ready before anyone asks. For lender-by-lender attitudes and how we place these cases, our gifted deposit mortgages page sits alongside this guide.

What counts as a gifted deposit

A gifted deposit is money given towards your purchase with no expectation of repayment and no stake in the property. Both halves of that sentence matter. If the money has to be paid back, it is a loan, not a gift, and lenders treat loans very differently, counting the repayments in your affordability assessment or declining the arrangement altogether. If the giver expects a share of the property or to live in it, that changes the legal and lending picture too, and needs declaring properly.

There is nothing wrong with family loans or shared arrangements, but they must be presented as what they are. Calling a loan a gift on a mortgage application is misrepresentation, and it is the kind of thing that surfaces at the solicitor stage anyway.

Who can gift the money?

Almost every lender accepts gifts from parents, and the large majority accept grandparents and siblings too. Beyond immediate family, criteria diverge. Some lenders accept aunts, uncles, cousins or family friends, while others do not, and gifts from anyone with a connection to the transaction, such as the seller or the estate agent, are treated with real caution. If your gift is coming from somewhere unusual, tell us early, because it genuinely affects which lenders we can use.

It is also worth knowing that a gifted deposit combines happily with most schemes and situations. Gifts are routinely used alongside shared ownership mortgages to fund the deposit on an initial share, and they are often the thing that unlocks a case for buyers with a patchy credit history, where a bigger deposit widens the choice of lenders considerably, something we cover in our guide to how long after a default or CCJ you can get a mortgage.

The gifted deposit letter

Every lender will require a signed letter or their own template form from the giver. The wording varies slightly between lenders, but it always confirms the same core points: the amount being gifted, the giver's name, address and relationship to you, confirmation that the money is an unconditional gift and not repayable, and confirmation that the giver will hold no interest in the property. Many lenders also ask the giver to acknowledge that the property could be repossessed if the mortgage is not maintained, and some require the signature to be witnessed.

We prepare clients for this at the application stage so the letter is ready when the lender asks, rather than holding the case up mid-underwriting.

Source of funds: the checks nobody warns you about

This is the part that catches families out. Under anti-money-laundering rules, your solicitor must verify where the gifted money originally came from, not just that it exists. In practice, the giver should expect to provide identification and bank statements showing the funds, plus evidence of how the money was built up, for example savings history, a property sale completion statement, an inheritance grant or an investment encashment.

Some parents find this intrusive. It is not personal and it is not optional, and the transactions that run smoothly are the ones where the paper trail is assembled before it is requested. If the money is being transferred from abroad, allow extra time, because international transfers attract additional scrutiny and sometimes additional lender restrictions, a point that comes up often in our foreign national mortgage work where family money crosses borders.

A practical tip: move the gift in one clean, traceable transfer rather than in dribs and drabs across months, and keep it in an account in your name well before exchange. Tidy money moves make for quick conveyancing.

Gifted equity: buying from family below market value

A close cousin of the gifted deposit is gifted equity, where a family member sells you their property below its market value and the discount acts as your deposit. Buying your parents' house at £250,000 when it is worth £300,000 gives you £50,000 of built-in equity, and a number of lenders will treat that as your deposit with no separate cash required. Fewer lenders operate here than in the standard gifted deposit space, and the legal work is a little more involved, but for the right family it is a genuinely powerful route onto the ladder. It is also a structure with tax angles for the seller, so both sides should take advice.

Is a gifted deposit taxable?

There is no upfront tax on receiving a gifted deposit. The consideration is inheritance tax. Everyone can give away £3,000 per tax year within their annual exemption, and larger gifts are treated as potentially exempt transfers, which fall outside the giver's estate provided they survive seven years from the date of the gift. For most families this never becomes an issue, but where large sums or estates close to the inheritance tax threshold are involved, it is worth the giver taking tax advice. We are not tax advisers, and this is general information rather than advice, but we flag it because it is the question every parent asks.

Frequently asked questions

Can a gifted deposit be my whole deposit? With most lenders, yes. Some prefer to see a portion of your own savings alongside it, which is one of the criteria points we check before choosing a lender.

Does the giver need to be in the UK? Not necessarily, but overseas gifts narrow the lender pool and extend the checks, so flag it at the very start.

Can the gift be paid directly to the solicitor? Usually yes, and some solicitors prefer it. Either way the source-of-funds evidence is the same.

What if my parents want the money back eventually? Then it is a loan, and it must be declared as one. There are lenders who accept family loans, but the case has to be set up honestly from the outset.

Does a gifted deposit affect my stamp duty? No. Stamp duty is charged on the property price, not on where your deposit came from, and our guide to stamp duty in 2026 shows exactly what you will pay as a first-time buyer.

Getting it right first time

A gifted deposit should make your purchase easier, not slower. Tell your broker about the gift at the very start, get the letter signed early, line up the giver's source-of-funds evidence, and choose a lender whose criteria fit your particular family situation. That last part is our job. And if the help your family wants to give is with affordability rather than deposit, a joint borrower sole proprietor mortgage lets a parent support the borrowing without going on the deeds, which also keeps your first-time buyer status intact.

If you are buying with family help, whether it is deposit, income support or both, contact us or call 0330 1330034 and we will structure it properly from day one. First-time buyers can also find wider guidance on our first-time buyer mortgages page.