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How to gift money for a house deposit

28th December 2023

Buying a home is one of the biggest expenses in modern day life. According to The Guardian, it now takes just under ten years for the average first time buyer to save a deposit for their home. The sharp hike in the cost of living we’ve experienced over the past couple of years, increasing private rental costs and higher house prices has played its part. Which is why many of us are now turning to the bank of mum and dad to speed the process along.  

Hodge research found 71% of people had gifted or borrowed money from a family member in 2023. The main reasons given for financial family gifting was to help with living expenses and managing debt, however more than a quarter of these gifts were being used for a house deposit (27%). This financial support from family demonstrates the reality of current affordability challenges for everyday living costs alongside the bigger life goals many of us work towards.  

If you’re thinking about gifting money for a house deposit, our blog gives you the download of what you need to know. It’s not as straightforward as simply handing over the money. There are certain requirements to mortgages with gifted deposits, including who can provide the funds to begin with. 

What is a mortgage with a gifted deposit? 

A gifted deposit can help you to get on the property ladder with help from your parents or family. A mortgage with a gifted deposit is when a family member, usually parents or grandparents, give money towards house deposit. The amount can either cover the full deposit or part of it. This can help the family member receiving the gift get access to better mortgage deals and lower monthly payments, making day–to–day life more affordable. 

However, when gifting money for a house deposit, it needs to be just that – a gift. If the money is expected to be paid back, then it’s counted as a loan and it’s likely the lender will factor this into their affordability calculations. If you’re considering giving a family member a loan to purchase a property, take a look at our guide. You’ll most likely need to prove the money is a gift by creating a gifted deposit letter. 

How do gifted deposits work? 

Most mortgage lenders will allow you to use a gifted deposit, but they will want to see evidence that the money doesn’t need to be paid back. They will also want to know your relationship to the person who is giving the money and if they can afford to give it. 

The evidence can be supplied in the form of a gifted deposit letter. This is letter you need to provide your solicitor with confirming the deposit is a gift and you won’t have to pay back the money later. The letter should make it clear the giver has no right to the property.  

Without a gifted deposit letter, you might not be able to use money that’s been given to pay for your deposit. 

A lender will also look at the rest of your finances to understand if you can afford the mortgage repayments. 

Who can give a gifted deposit for a mortgage? 

If you’re thinking about gifting money for a house deposit, we recommend seeking the help of a financial adviser to ensure you can afford the lump sum. 

Some lenders have strict rules about who can gift a deposit, so check these before you apply. Who can give a gifted deposit will depend on the mortgage lender and their criteria. Generally, mortgage lenders will only allow a mortgage deposit gift from parents, siblings and grandparents. Gifted deposits from more distant family members such as aunts and uncles may not be permitted. In most cases, gifted deposits from friends won’t be allowed either. 

Do I need to prove my deposit is gifted? 

You’ll need to follow some standard rules when using a gifted deposit. 

The mortgage gift deposit must be a gift and not a loan. This means you’ll need it in writing that you don’t have to pay the money back. You’ll also need the person who sent the gift to agree they have no stake in the property. This is known as a gifted deposit letter. 

Most mortgage advisers can provide a letter template for you. If not, you can seek out the assistance of a solicitor instead but be aware this may come with an additional cost. 

Most mortgage gifted deposit letters will include the following details: 

  • The name of the person receiving the gift 
  • The amount gifted 
  • A declaration it’s a gift with no repayment required 
  • A declaration that the person gifting has no stake in the property 
  • A statement that the person gifting is of sound mind 
  • The letter will need to be signed by the party gifting the deposit and by a witness too. 

Additional documents required 

Alongside the mortgage gifted deposit letter, it’s likely that the family member gifting the deposit will have to provide personal documents such as a photo ID, proof of address and their bank statements may also be requested. This is so the mortgage lender can comply with anti-money laundering regulations. 

If you’re gifting money for a house deposit to a family member who is co-purchasing a house with a partner or friend, you may wish to protect your gift with a declaration or deed of trust. This states who the money was gifted to, so if they split up or disagreements are had, it’ll ensure the money will remain the property of your family member. However, if they later get married, this may affect the deed of trust. 

Are gifted deposits subject to tax? 

No, you don’t have to pay tax on gifted house deposits, providing the person gifting the money doesn’t die within seven years of giving the deposit. If they pass away prior to the seven years and their estate is worth over £325,000 including the deposit, you’ll be liable to pay inheritance tax. 

Inheritance tax may be charged if the person giving the deposit dies within seven years. 

More helpful mortgage advice  

That’s our guide to gifting money for a house deposit. Want to find out more about how to gift money? Read our article on how to easy guide to gifting and inheritance tax, next. 

This article is correct at time of publishing and for general information purposes only. We recommend you seek independent financial advice. You can find a financial adviser and further personal finance information at 

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