Gifted Deposit Mortgage – 2025

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Gifted Deposit Mortgage - 2025 Update

Carolyn Dunion explains how gifted deposits for a mortgage work.

What is a gifted deposit? How does it all work?

A gifted deposit is, in essence, a deposit fund that somebody gives to you without any expectation of it being repaid.

Can I use a gifted deposit as a First Time Buyer?

Yes, absolutely. That’s probably the most common time we see it, where a parent or other relative wants to help a child get onto the property ladder.

What are the mortgage criteria for a gifted deposit? Do all mortgage lenders accept gifted deposits?

Most won’t have a problem. There can be some terms and conditions around gifted deposits that vary from lender to lender. But, generally, they’re perfectly happy.

It does need to be declared, which people often ask about. As long as it’s declared correctly, most lenders will accept a gifted deposit.

Do I need a gifted deposit letter? What should be included in it?

Yes, you do. There’s actually quite a bit of evidence required if you’re getting a gifted deposit, which can put some people off.

For our clients, we’ve got a template letter around the gifted deposit. Some lenders will have their own form or template, too. The essence of the letter is to say how much is being gifted, who by and to whom.

The important thing is to state that the gift is non-repayable and that the giver won’t have any legal interest in the property going forward.

In addition to that, both for the lender and the solicitor carrying out the transaction, we usually need ID and proof of address of the person making the gift. Both will also want to see the source of funds, which usually means a bank statement showing the funds in the gifter’s name. So, there is quite a bit the person making that gift has to declare.

Can I only receive gifted deposits from family members?

With some lenders, yes, they’re very specific about who can make the gift. Other lenders are quite relaxed about it and don’t really mind who is making the gift.

When you’re speaking to an advisor it’s important to make them aware of your relationship to the person making the gift, to make sure they find an appropriate lender.

Is there a limit on how much can be gifted?

Most lenders are quite relaxed about how much it is. Most people are really only gifting a 5% to 10% deposit, which is completely fine.

If it’s a particularly large gift, it’s worth checking with your advisor before making your application to make sure there won’t be any issues.

Do you have to pay tax on a gifted deposit?

I’m not a tax advisor, as you know, but generally speaking, I don’t think you will have to pay tax on it. Again, it’s worth speaking with an accountant to get advice for your specific circumstances. But it’s not something we see regularly.

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What will happen if a gifted deposit is not declared?

It becomes problematic at the point of the transaction concluding, because the solicitor must do anti-money laundering checks. Lenders do this too – they want to see where the money is coming from and that it’s a legitimate source.

If the mortgage offer has been issued and the gifted deposit has not been declared, it could stop the transaction going through.

But there’s lots of stages at which we would check. If we were putting in an application we want to see the source of deposit funds anyway. We would ask to see a bank statement showing those funds – and if you don’t have that, that would lead us down the road to find out who’s gifting it to you and getting the right paperwork in place.

How do solicitors check the source of funds?

They’ll want to know who the person is and their relationship to you. They’ll ask for ID, proof of address and source of funds, which will be a number of bank statements or perhaps evidence of a property sale.

It’s worth noting that if the funds are coming from abroad, solicitors usually will want a bank statement – and that may need to be translated into English.

How many bank statements do I need for a gifted deposit?

As an applicant, whether you’ve got a gifted deposit or not, you will usually need at least three months’ personal bank statements. That’s the case if the gift has been put into your bank account and also if it hasn’t yet.

The person making the gift will usually also need to provide three to six months’ bank statements. What lenders and solicitors are doing is sense-checking it. If somebody’s perhaps had a very big windfall, like an inheritance or something a while ago, they may ask for evidence to justify how that person has come by those funds.

What is the seven-year rule for gifted deposits?

I’m not going to give any specific advice here, because it really does fall into an area where you need a financial planner.

As a broad summary, though, if somebody is making a gift to get money out of their estate for inheritance tax planning purposes, but they pass away within seven years of having made the gift, it could fall back into the estate for tax purposes.

That’s quite specific to individual circumstances. Again, it’s worth talking through with a mortgage advisor, financial planner and potentially an accountant as well.

What is the alternative to a gifted deposit?

Probably the alternative is just to take the longer, harder road and save for your deposit.

What are the pros and cons of a gifted deposit?

A gifted deposit is a massive pro and very wonderful. Everyone would like to have nice, affluent relatives that are very generous. It certainly can help people get onto the property ladder faster – or at all.

The cons are that there’s a bit more paperwork, and some people find it quite intrusive that we’re asking for documents from somebody who isn’t actually buying the property. But if you can live with the paperwork, it’s a jolly good idea.

What else do we need to know about a gifted deposit?

As always, criteria changes, and the types of paperwork that lenders and solicitors need can change from time to time. It’s important to get the right lender for your circumstances at the beginning, so working with a mortgage advisor who has that up-to-date knowledge is hugely helpful.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

For specialist tax advice, please refer to an accountant or tax specialist.