Gifted deposits

A gifted deposit is when money is given by a family member for a deposit on a house.

What is a gifted deposit?

​A gifted deposit is a cash gift, from a relative, that you use to pay for some or all of a mortgage deposit.​

​For example, a family member gifts you enough money to take your deposit from 5% to 10%. This can mean you’re able to borrow more to buy that home you really want or get a better mortgage deal.​

A gifted deposit must be a gift. It can’t be a loan and there must be no agreement to pay back the money. In fact, you’ll need to state in writing that you won’t have to pay this money back in the future. The gift giver can’t have any stake in the home, either.

How does a gifted deposit work?

There are a few steps to using a gifted deposit for buying a home.

1. Give a gifted deposit letter

Give your conveyancer a letter that confirms the deposit is a gift. This is also called a declaration letter. It declares that the person who gave you the gift doesn’t expect you to pay it back. If you must pay back the money, it becomes a loan, which may make it harder for lenders to approve you for a mortgage.​

By signing the letter, your gift giver also shows they accept that their gift doesn’t give them rights over the property.

2. Get ID from the person gifting

Your conveyancer may also need proof of identification from the person gifting the money. This can vary, so ask what they need.

Typically, you’ll need;

  1. a photo ID such as a passport or driving licence
  2. two different proofs of address.

Proof of address could be a:

  • driving licence
  • utility or council bill
  • bank statement
  • letter from HMRC.

3. Get proof of the money

Your conveyancer needs to check where the money has come from. This might be from the sale of a house or other asset, the sale of shares, or a pension. It may also be something they have inherited from another relative.​

​If the gift has come from a separate saving pot in your donor's name, it can be more complicated. Your donor may need to show evidence of where they got the money. This is to prove the funds meet Anti-Money Laundering Regulations.

Who can give a gifted deposit?

Yes

Lenders have their own rules about who can and can’t give a gifted deposit, but it generally includes:

  • Parents, stepparents, parents-in-law.
  • Siblings, half-siblings, step-siblings, brothers- and sisters-in-law.
  • Grandparents, step-grandparents.
  • Aunts/uncles (related by blood).
  • Nieces/nephews.
  • Partners living with applicant.
  • Applicants' children, stepchildren, sons-and daughters-in-law and adopted children.

No

The people who usually can’t give a deposit:

  • Family friends.
  • Employer.
  • Developer / your landlord.
  • An aunt or uncle who is not your blood relative.
  • Cousins.
  • Foster/guardian children.
 

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