Gifted Mortgage Deposits: Lender Rules, Letters and Proof

A gifted deposit can turn buying your first home from a distant plan into something achievable. But before the lender and conveyancer can use that money, they need to establish who is providing it, whether it must be repaid and where it came from.

The key is to get the paperwork right before you apply. This guide explains the evidence usually needed, how unusual gifts are treated and which issues can delay completion. For lender-specific support, see our gifted deposit mortgage advice.

What is a gifted deposit for a mortgage?

A gifted deposit is money someone gives towards your property purchase without expecting it to be repaid. Normally the person making the gift must also confirm they will not acquire a share or beneficial interest in the property. Lenders and solicitors may have additional requirements, especially if the giver will live in the home.

For example, on a £300,000 purchase with a 10% deposit, you might contribute £10,000 from savings and receive £20,000 from a parent. Your total deposit is £30,000. The mortgage lender still needs to establish that the £20,000 is a genuine gift rather than an undisclosed loan.

Who can give you a mortgage deposit?

Parents are widely accepted, and many lenders also consider gifts from grandparents, siblings and other close relatives. Gifts from friends, more distant relatives or people connected to the property transaction need careful lender selection; some lenders will not accept them.

A gift from overseas can be possible, but the source of funds, location of the donor and transfer history may narrow your lender choice. Tell your broker where the money is held before moving it. If your circumstances involve international income or deposits, our foreign national mortgages guide may help.

What should a gifted deposit letter include?

The exact wording is lender-specific. Some lenders provide a mandatory form, while others accept a signed letter. Common requirements include:

• Donor's full name, address and relationship to the buyer.

• The exact amount being gifted and the property address, where requested.

• Clear confirmation that the money is an unconditional gift, not a repayable loan.

• Confirmation that the donor will have no ownership or beneficial interest in the property.

• Donor signature, date and any witnessing, identification or occupancy declarations the lender requires.

Do not assume a template found online will satisfy your chosen lender. Ask your mortgage adviser or conveyancer for the correct wording first.

What proof will the solicitor need?

Conveyancers must perform anti-money-laundering checks. As well as identifying the donor, they can ask for recent bank statements and evidence showing how the gifted money was obtained. The evidence might include savings records, payslips, a property sale completion statement, inheritance documents or investment statements.

The solicitor may need to investigate unusual transfers, cash deposits or money moving through several accounts. Avoid moving funds repeatedly just to make statements look simpler. Keep the full, accurate audit trail and ask your solicitor how and when to transfer the gift.

Can the whole mortgage deposit be gifted?

Yes, some lenders permit the entire deposit to come from an acceptable gift. Others require a contribution from the buyer's own funds or restrict which donors qualify. The answer depends on the lender, loan-to-value ratio, property and borrower circumstances.

Gifted deposits can sometimes be combined with shared ownership mortgages, subject to the scheme and lender rules. A larger deposit can also change the range of options available for borrowers with previous credit problems, but it does not guarantee acceptance.

What if the money must be repaid?

If repayment is expected, it is a family loan, not a gift. Declaring it as a gift would be misleading and could cause the application to be rejected. Disclose any repayment agreement, interest, future interest in the property or occupancy conditions at the outset so suitable lenders can be checked.

If a family member wants to support affordability rather than provide cash, a joint borrower sole proprietor mortgage might be worth discussing, subject to criteria and legal advice.

Gifted equity: buying a relative's home at a discount

Sometimes a family member sells their property below market value. The difference between the valuation and the sale price may qualify as gifted equity with certain lenders, potentially reducing the cash deposit needed.

This structure needs careful underwriting, independent valuations, legal advice and consideration of the seller's tax position. It is not identical to a normal cash gift.

Do you pay tax on a gifted deposit?

Receiving a genuine cash gift does not normally create an immediate UK income-tax charge for the recipient. Larger gifts can have inheritance-tax implications for the person giving the money, depending on the circumstances and timing. Other taxes may matter when the gift involves property rather than cash.

The amount of Stamp Duty Land Tax on a purchase generally depends on the transaction and the buyer's circumstances, not simply whether a deposit was gifted. For current calculations, see our Stamp Duty guide and seek independent tax advice if relevant.

Gifted deposit checklist before you apply

• Tell your adviser the amount, donor's relationship and where the funds are held.

• Confirm your chosen lender accepts that kind of gift.

• Obtain the lender's approved gifted deposit form or letter wording.

• Ask the donor to prepare ID, bank statements and source-of-funds evidence.

• Agree the transfer timing and destination with your solicitor.

• Keep records of all transfers and disclose loans or occupancy arrangements fully.

Frequently asked questions

Can my parents pay the gift straight to the solicitor? Often, yes, but the conveyancer will need to approve the arrangement and complete donor checks.

Can grandparents provide my whole deposit? Many lenders accept grandparent gifts, sometimes for the full deposit. Check the specific lender's rules.

What if the donor is abroad? It may still be possible, but allow more time for identity, source-of-funds and international-transfer checks.

Will a gifted deposit automatically improve the interest rate? Not necessarily. A larger total deposit can move you into a lower loan-to-value bracket, but rates and eligibility depend on the whole case.

Talk to Drummonds before moving the money

At Drummonds Finance Group, we help first-time buyers and home movers across the UK select lenders that accept their deposit arrangements, then coordinate the requirements with the conveyancer. Start with our first-time buyer mortgage advice or contact us. Call 0330 133 0034 for a conversation about your circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage.