A gifted deposit can make buying feel more achievable if saving the full deposit yourself would take longer.
However, lenders will usually want to check that the money is a genuine gift, not a loan that needs to be repaid. They may also ask who the gift is from, where the funds came from and whether the person gifting the money expects any ownership or future repayment.
This guide explains how gifted deposits work, what evidence may be needed and what to check before using one for a mortgage.
What to know about gifted deposits
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The money must usually be a gift
Most lenders need confirmation that the deposit is not a loan and does not need to be repaid.
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The donor may need to provide proof
The person gifting the money may need to show ID, bank statements and where the funds came from.
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Lender rules can vary
Some lenders accept gifts from parents, grandparents or close family, but rules can differ by relationship and situation.
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Ownership expectations should be clear
The donor usually cannot expect a share of the property unless this is agreed separately and accepted by the lender.
Buying with a gift? Check your options
What is a gifted deposit?
A gifted deposit is money given to you to help buy a property. It is usually provided by a parent, grandparent or close family member, although some lenders may accept gifts from other people depending on their criteria.
The key difference from borrowing is that a gifted deposit is not normally expected to be repaid. If repayment is expected, the lender may treat it as a financial commitment.
How gifted deposits work in practice
A gifted deposit can boost the deposit you already have available.
For example, you might use your own savings and receive the remaining amount from a family member. Combining the two can increase your total deposit, reduce the mortgage you need and potentially lower your loan-to-value.
Example gifted deposit purchase
Example
Amount
Property price
£250,000
Buyer’s savings
£7,500
Gifted deposit
£17,500
Total deposit
£25,000
Mortgage required
£225,000
Loan-to-value
90%
This example shows how your own savings and a gifted deposit could combine to make up a 10% deposit at different property prices. Check your own figures with our loan-to-value calculator →
Who can give a gifted deposit?
Gifted deposits are commonly given by close family members, such as a parent, grandparent, sibling or other close relative.
Some lenders may also consider gifts from a spouse, partner, wider family member or friend, depending on the application.
Each lender has its own rules around who can give a deposit gift. Gifts from immediate family are often more straightforward, while gifts from outside close family may need extra evidence.
What lenders may check
Lenders usually need to confirm that the gifted deposit is genuine and that the money can be traced.
They may ask for:
- a gifted deposit letter
- proof of ID from the person giving the money
- bank statements showing where the money came from
- confirmation that the gift does not need to be repaid
- confirmation that the person giving the money will not own part of the property
Your solicitor may also need to carry out checks on the source of funds as part of the legal process.
This helps confirm the deposit source and keeps the mortgage application clear.
Applying with a gifted deposit?
An Agreement in Principle can help you check your borrowing position before you rely on gifted money.
What is a gifted deposit letter?
A gifted deposit letter is a written statement confirming that the money is being given as a gift.
It usually confirms:
- who is giving the money
- how much is being gifted
- their relationship to the buyer
- that the money does not need to be repaid
- that the person giving the money will not have ownership rights in the property
The exact wording can vary by lender and solicitor. Some may provide their own template, so it is usually best to use the wording they request.
Gifted deposit or borrowed deposit?
A gifted deposit can help with the deposit, but it is different from borrowing money from family or another person.
The key difference is whether the money needs to be repaid. If it is a genuine gift, the lender may treat it as deposit support. If repayment is expected, the lender may treat it as a financial commitment.
Area
Gifted deposit
Borrow deposit
Repayment
Usually no repayment expected
Repayment may be required
Source of funds
Money is given as a gift
Money is provided as a loan
Lender view
Often treated as deposit support
May be treated as a financial commitment
Affordability impact
Usually less impact if it is a genuine gift
Repayments can reduce affordability
Ownership rights
Gift giver usually has no ownership rights
Terms may need legal review
Paperwork
Gifted deposit letter usually needed
Loan details may need declaring
If repayment is expected, the arrangement should be made clear to your broker, lender and solicitor. This helps avoid confusion later in the mortgage process.
Take the guesswork out of affordability. Check how much you could borrow with our affordability calculator →
Other ways to get support with buying
A gifted deposit is one way family can help, but it is not the only route.
Other options may suit buyers who need help with affordability, income, deposit size or mortgage structure.
Family-assisted mortgage
A family-assisted mortgage may help if relatives want to support your purchase through savings, security or other lender-approved arrangements.
- Family support may help increase your deposit or borrowing options
- The lender will explain any requirements and risks involved
Guarantor mortgage
A guarantor mortgage may help if someone is willing to support your application by guaranteeing the mortgage.
- The guarantor agrees to cover payments if you cannot make them
- Their income, savings or property may be assessed by the lender
Joint borrower, sole proprietor
A joint borrower sole proprietor mortgage can let someone help with affordability without being named as an owner.
- More than one person can be named on the mortgage
- The property usually stays in the buyer’s name
Joint mortgage
A joint mortgage may help if you are buying with someone else and want to combine income and deposit.
- Everyone named usually shares responsibility
- Ownership and exit plans should be agreed early
Comparing family support options?
A gifted deposit is one way family can support your home purchase, but it is not the only option. Muttuo can help you compare your mortgage options.
Benefits and points to compare
Using a gifted deposit can make buying feel more achievable, especially if it helps you reach your target deposit sooner.
Potential benefits
It can reduce the savings gap
A gifted deposit can help you reach the deposit needed for the property you want to buy.
It may improve mortgage options
A larger deposit may reduce your loan-to-value, which can sometimes improve lender choice or product availability.
It can make buying sooner possible
Family support may help you move ahead without waiting years to save the full deposit alone.
Trade-offs to check
The gift needs evidence
Lenders and solicitors usually need to see where the money came from.
It must be a genuine gift
The person gifting the money usually needs to confirm it does not need to be repaid.
Ownership expectations must be clear
The person gifting the money usually cannot expect a share of the property unless this is part of a separate legal arrangement.
Tax and legal points to check
A gifted deposit can raise tax or legal questions, especially if the gift is large or part of wider family planning.
For example, inheritance tax rules may be relevant if the person gifting the money dies within a certain period after making the gift. The rules can be complex, so it is worth getting tax or legal advice where needed.
Legal advice may also be important if the money is not a straightforward gift, such as where repayment is expected, ownership is being discussed, or conditions are attached.
Muttuo Mortgages can help with the mortgage side, but tax and legal advice should come from a suitably qualified adviser or solicitor.
Is a gifted deposit right for you?
A gifted deposit may be useful if it helps you reach a workable deposit, reduce your loan-to-value or buy sooner than you could with savings alone.
It may suit you if the money is a genuine gift, the person giving it is comfortable confirming this in writing, and the source of funds can be evidenced.
If repayment is expected, ownership is being discussed, or the arrangement feels more complex, another support route may be worth comparing.
How Muttuo Mortgages can help
A gifted deposit can strengthen your deposit position, but the lender, paperwork and affordability checks still need to line up.
Muttuo Mortgages can help you:
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check how a gifted deposit could affect your mortgage options
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compare over 100 lenders that may accept your deposit source and circumstances
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review how the gift affects loan-to-value, affordability and lender criteria
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help you understand what to prepare before applying
Whether you are buying your first home, using family support or comparing low-deposit routes, getting advice early can help you understand which options are realistic before you apply.
Using a
gifted deposit?
Muttuo can help you check lender criteria, affordability and next steps before you apply.
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Gifted deposit mortgage FAQs
These FAQs answer common questions about gifted deposits, including gifted deposit letters, lender checks, family support, affordability and tax or legal points.
What is a gifted deposit?
A gifted deposit is money given to help you buy a property.
It is usually given by a parent, grandparent or close family member and used towards your mortgage deposit.
Can my parents gift me a deposit?
Yes, parents commonly gift deposits to help children buy a home.
The lender will usually need written confirmation that the money is a gift, not a loan, and that your parents do not expect ownership rights in the property.
Do I need a gifted deposit letter?
Usually, yes.
Most lenders will ask for a gifted deposit letter confirming who is giving the money, how much is being gifted, whether it needs to be repaid and whether the person gifting expects any ownership rights.
Can a gifted deposit be from a friend?
It depends on the lender.
Some lenders prefer gifted deposits from close family members. Others may consider gifts from friends or wider relatives, but checks can be stricter.
Does a gifted deposit affect mortgage approval?
It can support your application, but it does not guarantee approval.
The lender will still assess your income, spending, credit profile, property and affordability. They will also need to evidence the gifted deposit clearly.
Can a gifted deposit improve my mortgage options?
It can, depending on how it affects your deposit and loan-to-value.
A gifted deposit may help you increase your total deposit, reduce the amount you need to borrow and move into a lower loan-to-value band.
Can a gifted deposit be a loan?
A gifted deposit is usually expected to be a gift, not a loan.
If the money needs to be repaid, the lender may treat it as a financial commitment. This can affect affordability and may change which lenders are available.
Does the person gifting the deposit own part of the property?
Usually, no.
Most lenders expect the person gifting the money to confirm they will not have ownership rights in the property unless they are part of the legal ownership structure.
Are there tax implications with gifted deposits?
There can be tax considerations, especially with larger gifts.
Inheritance tax rules may be relevant in some cases, so the person gifting the money may want to take tax or legal advice before making the gift.
Can I use a gifted deposit with a 5% deposit mortgage?
It may be possible, depending on the lender and the rest of your application.
A gifted deposit could help you reach the required deposit or increase the amount you have available. Lenders will still check affordability, credit profile, property type and deposit source.
Can I use a gifted deposit for shared ownership?
Some lenders and providers may allow gifted deposits for shared ownership purchases.
You will still need to meet lender and scheme criteria. The lender and solicitor may ask for the same evidence, including a gifted deposit letter and proof of funds.
Can I use a gifted deposit for a new-build mortgage?
It may be possible, but lender and property criteria can vary.
If you are buying a new build, the lender may also assess the property type, developer incentives, valuation, warranty and completion timeline.
