Introduction.
For many buyers, and especially in London, help from family is what turns saving into buying.
A gifted deposit is simple in principle: someone gives you money towards your purchase and expects nothing back. In practice, lenders and solicitors need to see exactly where that money came from and confirm it really is a gift.
This guide explains who lenders accept gifts from, the paperwork involved, how a larger deposit can lower your rate, and the tax points the person giving should consider.
Planned early, a gift causes no delay at all. Left to the last week before exchange, it is one of the most common reasons a purchase stalls.
How long the giver generally needs to survive for a gift to fall outside their estate for inheritance tax.
01How a gifted deposit works.
A gifted deposit is money given towards your purchase with no expectation of repayment and no share in the property in return.
What lenders need to be satisfied of
- It is a genuine gift. Not a loan, and not repayable on demand or when you sell.
- The giver has no interest in the property. They will not own part of it or have any claim on it.
- The money is clean. Its source can be traced through bank statements, in line with anti-money laundering rules.
- You can afford the mortgage. The gift helps with the deposit, but your own income still has to support the loan.
Gift or loan?
If the money has to be paid back, lenders treat it as a loan. That usually counts against your affordability, and many lenders will not accept a borrowed deposit at all.
Adviser’s note
Be completely open about any family arrangement. A gift described as a loan in an email, or a loan described as a gift on a form, can cause real problems at underwriting.
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- 02Who can give you a deposit
- 03The paperwork lenders ask for
- 04How a bigger deposit changes your rate
- 05Tax points for the giver
- 06Other ways family can help
- 07A gifted deposit, illustrated
- 08Checklist and glossary
02Who can give you a deposit.
Every lender sets its own rules. Close family is almost always fine; the further the relationship, the fewer lenders will accept it.
| Who is giving | How lenders typically view it |
|---|---|
| Parents and step-parents | Accepted by almost all lenders |
| Grandparents | Widely accepted |
| Brothers and sisters | Accepted by most lenders |
| Aunts, uncles and cousins | Accepted by many lenders |
| Godparents and friends | Accepted by a smaller group |
| Family living abroad | Accepted, with extra source-of-funds checks |
Indicative of lender attitudes, November 2026. Criteria vary and change.
Where it gets more involved
- Gifts from overseas. Expect more questions on where the money came from, and allow time for international transfers.
- Several givers. Each person giving needs their own letter and evidence.
- A giver who will live with you. They may need to sign a waiver confirming they have no rights over the property.
- New builds. Some developers and lenders apply extra checks to incentives and gifts on new homes.
03The paperwork lenders ask for.
Your lender and your solicitor will both check the gift. Having the evidence ready from the start keeps the purchase on time.
From the person giving
- A signed gifted deposit letter or declaration
- Photo ID and proof of address
- Bank statements showing the money building up, often three to six months
- Evidence of where the money came from, such as savings, a property sale or an inheritance
- Confirmation they will not live in the property, if asked
What the gift letter says
- The amount, and that it is a gift.
- That it is not repayable and carries no interest.
- That the giver will have no share in the property.
- The giver’s relationship to you and their contact details.
Solicitor checks
Your solicitor must verify the giver’s identity and funds before exchange, so they may contact the giver directly. Introduce them early.
04How a bigger deposit changes your rate.
Mortgage rates are priced in loan-to-value bands. A gift that moves you into a lower band can reduce your rate as well as your loan.
| Deposit | Amount | Loan | Loan to value |
|---|---|---|---|
| 5% | £27,500 | £522,500 | 95% |
| 10% | £55,000 | £495,000 | 90% |
| 15% | £82,500 | £467,500 | 85% |
| 25% | £137,500 | £412,500 | 75% |
Based on a £550,000 London flat. Illustrative only.
Why the band matters
Lenders typically offer better rates at each step down, most noticeably from 95% to 90% and from 90% to 85%. A gift that just reaches the next band can be worth far more than its face value over a fixed term.
05Tax points for the giver.
A gift is usually straightforward for the person receiving it. The tax questions sit with the giver, mainly around inheritance tax.
- The seven-year rule. A gift is generally outside the giver’s estate for inheritance tax if they live for seven years after making it.
- The annual exemption. Each person can give £3,000 a year free of inheritance tax, and carry forward one unused year.
- Gifts from surplus income. Regular gifts made from income, without reducing the giver’s standard of living, can be exempt.
- Taper relief. If tax is due on a gift and the giver dies between three and seven years after it, the tax can be reduced.
Take tax advice
We are mortgage advisers, not tax advisers. For larger gifts, the giver should speak to an accountant or financial planner, and it is sensible to keep a written record of the gift.
Selling an asset to fund the gift
If the giver sells shares or a second property to raise the money, capital gains tax may be due on that sale. It is worth planning the timing.
06Other ways family can help.
A cash gift is not the only option. Depending on your family’s situation, one of these may suit better.
| Option | How it works |
|---|---|
| Joint borrower sole proprietor | A family member joins the mortgage to add income but is not on the title |
| Family deposit schemes | A relative’s savings are held as security instead of being given away |
| Gifted equity | A relative sells you their home below its value, and the discount acts as your deposit |
| A family loan | Possible with some lenders, but repayments count against your affordability |
Adviser’s note
These options carry different risks for the people helping. We explain each one to everyone involved, so the whole family understands what they are agreeing to.
Our Joint Borrower Sole Proprietor Guide covers the income option in more detail.
07A gifted deposit, illustrated.
A first-time buyer in Zone 2
A nurse buying a £550,000 one-bedroom flat, with £30,000 of her own savings and help offered by her parents.
- Own savings
- £30,000, built up over four years
- Gift
- £52,500 from her parents, from a property sale
- Deposit
- £82,500, or 15%, moving her into the 85% band
- Evidence
- Gift letter, parents’ ID and completion statement from their sale, prepared before the offer
- Outcome
- A five-year fix at the 85% band, with first-time buyer stamp duty relief
This example is illustrative and does not describe a real client.
08Checklist and glossary.
Documents to have ready
- Agree the amount and timing with the person giving
- A signed gifted deposit letter
- The giver’s photo ID and proof of address
- The giver’s bank statements showing the funds
- Evidence of where the money came from
- Your own ID, payslips and bank statements
- Your solicitor’s details, shared with the giver
- Any occupier waiver, if the giver will live with you
Glossary
- Gifted deposit
- Money given towards a purchase with no repayment expected.
- Gift letter
- A signed statement from the giver confirming the gift.
- LTV
- Loan to value: the loan as a percentage of the price.
- Source of funds
- Evidence of where the money came from.
- AML
- Anti-money laundering checks by lenders and solicitors.
- Occupier waiver
- A form confirming someone living there has no rights over the property.
- Gifted equity
- A discount on a family sale used as a deposit.
- PET
- Potentially exempt transfer: a gift that may be free of inheritance tax.
Related: First-time buyer advice · First-Time Buyers Guide · All guides