Gifted deposits explained for mortgages
A gifted deposit is money given by a family member or close relative to help UK first-time buyers fund their home purchase. It’s an increasingly common option for those struggling to save.
1. How Gifted Deposits Work
- Can be from parents, relatives, or sometimes close friends
- Typically requires a letter confirming the funds are a gift, not a loan
- Lenders may request proof of source
“A gifted deposit can help UK first-time buyers meet mortgage deposit requirements, with lenders needing confirmation that it’s not repayable.”
2. Benefits of Using a Gifted Deposit
- Reduces personal savings requirement
- Can improve Loan-to-Value (LTV), lowering interest rates
- Helps buyers enter the property market sooner
3. Considerations and Lender Requirements
- Gifted funds must usually be available in your account before exchange of contracts
- Lenders may require a gift letter detailing:
- Amount
- Donor’s relationship
- Confirmation it’s not repayable
- Some lenders limit the proportion of deposit that can be gifted (e.g., 10–20%)
FAQs
Q: Can gifted deposits come from outside the UK?
A: Yes, but lenders may request extra documentation for international transfers.
Q: Will a gifted deposit affect my mortgage approval?
A: It helps improve deposit size and affordability but lenders will still assess income, credit score, and other factors.