Gifted Deposits for First-Time Buyers: A gifted deposit is money given towards a property purchase without an expectation of repayment or ownership.
Lenders and solicitors normally need evidence of the donor, the source of funds and the nature of the gift.
Prepare the paperwork before submitting the mortgage application.
What Is a Gifted Deposit?
A gifted deposit is commonly provided by:
- Parents
- Grandparents
- Siblings
- Other relatives
- A spouse or partner
Acceptance depends on lender policy.
Some lenders accept gifts only from close relatives. Others consider wider family or unrelated donors.
The donor usually confirms that the money:
- Is an unconditional gift
- Does not need to be repaid
- Does not create an ownership interest
- Will not give them a right to live in the property
- Does not involve undisclosed borrowing
These points matter because a repayable gift is a loan.
A loan changes the buyer’s commitments and may affect affordability.
What Evidence May Be Required?
The lender, adviser or solicitor may request:
- A gifted-deposit declaration
- Donor identification
- Donor address evidence
- Bank statements
- Savings evidence
- Proof of investment withdrawal
- Probate or inheritance records
- Evidence from a property sale
- An explanation of large transactions
The precise evidence depends on the donor and source.
A transfer appearing in the buyer’s account does not prove where the money originated.
Why Are Source-of-Funds Checks Necessary?
Solicitors and regulated firms must consider financial-crime risks.
Therefore, they may need to trace the money beyond the immediate transfer.
For example, a parent may have received the funds through:
- Long-term savings
- A matured investment
- Sale of another property
- Inheritance
- Business proceeds
Each route may require different documents.
Gathering them late can delay exchange or completion.
Does a Gifted Deposit Affect Loan-to-Value?
Once accepted, the gift usually forms part of the buyer’s deposit.
For example:
- Purchase price: £300,000
- Buyer savings: £10,000
- Family gift: £20,000
- Total deposit: £30,000
- Mortgage: £270,000
- LTV: 90%
The lender still reviews affordability and credit independently.
A larger deposit may reduce the LTV. However, it does not correct insufficient income or an unsuitable property.
Can the Donor Live in the Property?
This can create lender and legal complications.
If the donor intends to occupy the home, the lender may need to understand whether they could acquire occupancy rights.
Never describe a deposit as unconditional if the donor expects to live in the property.
The application should reflect the actual arrangement.
Can a Gift Be Repaid Later?
A true gift normally has no repayment obligation.
The buyer may choose to help the donor in future. However, a private agreement to repay the money means it may be treated as borrowing.
Undisclosed repayment arrangements can affect the accuracy of the mortgage application.
What Should the Donor Consider?
The donor should consider their own:
- Emergency savings
- Retirement plans
- Care costs
- Tax position
- Benefits
- Estate planning
- Future housing needs
Helping a buyer today should not create financial difficulty for the donor later.
Independent legal or tax advice may be appropriate.
When Should the Gift Be Disclosed?
Disclose it during the first mortgage discussion.
The adviser needs to know:
- Gift amount
- Donor relationship
- Country in which the funds are held
- Source of the money
- Whether repayment is expected
- Whether the donor will occupy the property
Early disclosure helps identify lenders whose rules fit the arrangement.
Finding a Suitable Adviser
Use Connect Experts to compare mortgage advisers experienced with first-time buyers.
Before choosing an adviser, ask whether they handle:
- Gifted deposits
- Overseas gifts
- Multiple donors
- Joint applications
- Family-assisted mortgages
- Complex source-of-funds cases
A deposit is not merely a percentage of the purchase price. It is part of the legal and financial story behind the transaction.
