Gifted Deposits Explained: Can Family Help With Your Mortgage Deposit?

Saving a deposit can be one of the biggest challenges when buying a home. For some buyers, financial help from parents, grandparents or another family member can make the difference.

This is commonly known as a gifted deposit.

But what counts as a gift, who can provide one, and what will your mortgage lender want to know?

What is a gifted deposit?

A gifted deposit is money given to you to help towards the deposit on a property.

The important word is gifted.

Typically, the person providing the money confirms that it isn't a loan and doesn't need to be repaid. They would also generally need to confirm that they won't acquire an ownership interest in the property as a result of the gift.

If the money needs to be repaid, tell your mortgage adviser. A loaned deposit is different from a gifted deposit and may affect affordability and lender eligibility.

Who can gift a mortgage deposit?

Parents and grandparents are common sources of gifted deposits, but lender criteria vary regarding who they will accept a gift from.

Some lenders may accept gifts from a wider range of relatives or other people, while others have more restrictive requirements.

This is why it's worth discussing the gift with your mortgage adviser before applying.

What evidence will I need?

Mortgage lenders and solicitors will normally want to understand where your deposit has come from.

The person providing the gift may need to sign a declaration or letter confirming details of the arrangement.

Evidence of the source of the funds may also be required as part of anti-money-laundering checks.

Requirements vary, so it's best not to assume that transferring the money into the buyer's account is all that's required.

Does a gifted deposit affect how much I can borrow?

Your borrowing capacity will still be based on the lender's affordability assessment and lending criteria.

A larger deposit can change the Loan-to-Value (LTV) of the mortgage and may influence which mortgage products are available, but receiving a gift doesn't automatically mean a lender will allow you to borrow more.

Tell your adviser early

If some or all of your deposit is being provided by someone else, mention this at the beginning of the mortgage process.

Your adviser can then take this into account when considering suitable lenders and explain what documentation is likely to be needed.

Getting help with a gifted deposit mortgage

Receiving help from family can make buying a property possible sooner than expected, but it's important that the mortgage application correctly reflects where the money has come from. If you're planning to buy using a gifted deposit, speak to us about your circumstances and we can help you understand your mortgage options.