A gifted deposit is money given toward a property purchase — usually by parents or grandparents. For a lender to accept it, the gift must be genuine and non-repayable, with no expectation of the money being paid back and no legal or beneficial interest in the property for the donor. When these conditions are met, most lenders accept gifted deposits and many allow the full deposit amount to be gifted. For more information, see the government home ownership support schemes.

The most important rule: it must be a gift, not a loan

If there is any agreement — written or informal — that the money will be repaid, the lender must treat it as a loan. A loan counts as a financial liability in the affordability assessment, reducing how much you can borrow and limiting which products are available. Declaring an informal loan as a gift constitutes mortgage fraud. If your parents do genuinely expect repayment, declare it honestly from the start and speak to us — some lenders will consider soft family loans under specific criteria.

What documentation is required?

Both your solicitor and your mortgage lender will require documentation from the person making the gift. You will need a signed gifted deposit letter from them confirming the gift is non-repayable and that they hold no interest in the property. Alongside this, the lender will request photo identification, proof of address, and three to six months of bank statements showing the funds in the donor’s account and confirming their source — whether that is savings, a property sale, an inheritance, or something else.

What the gifted deposit letter needs to confirm

Lenders and solicitors have a standard set of points that every gifted deposit letter must address. The letter needs to confirm the donor’s full name and address, the buyer’s full name and address, the relationship between them, the exact amount being gifted and its source, that the money is a genuine gift with no expectation of repayment, that the donor has no interest in the property and will not be living there, and that the donor is financially solvent and not facing bankruptcy or insolvency. We can provide you with a template that covers all of these points.

Inheritance tax considerations

Large gifts may become subject to inheritance tax if the donor dies within seven years of making the gift. The annual gifting exemption of £3,000 per year is always tax-free regardless of timing. On the sliding scale known as taper relief, the potential tax liability reduces from years three to seven after the gift is made. For larger estates or larger gifts, a brief conversation with an estate planning solicitor before the transfer takes place is a sensible step.

Overseas gifted deposits

If your deposit is being gifted from abroad — a parent living overseas, foreign currency savings, or a family trust — additional documentation is required, including evidence of the currency exchange and in some cases certified translations of overseas bank statements. We handle this regularly and know which lenders are most experienced with international gifted deposit cases and least likely to create delays around overseas source-of-funds checks.