Key Takeaway

UK mortgage lenders will accept a gifted deposit from family members, but they require formal documentation: a signed gifted deposit letter confirming the money is a non-repayable gift (not a loan), proof of the donor’s funds, and evidence the money has been transferred into your account. The gift cannot come with any expectation of repayment or a stake in the property, and the lender will verify the source to comply with anti-money laundering rules. Gifted deposits are common for first-time buyers and can cover part or all of your deposit, but you must declare the arrangement on your mortgage application.

What Is a Gifted Deposit?

A gifted deposit is money given to you, typically by a parent or close family member, to help you buy a property. The key requirement is that the money must be a genuine gift with no strings attached: the donor cannot expect repayment, cannot have a legal charge on the property, and cannot gain any ownership stake.

Most UK lenders accept gifted deposits from immediate family (parents, grandparents, siblings) and sometimes from other relatives or close friends, though policies vary. Some lenders restrict who can gift, and a few will only accept gifts from parents or grandparents. According to MoneyHelper, family help with deposits has become increasingly common as property prices have risen relative to average incomes.

The concept of family financial assistance for major purchases is well established in personal finance literature. As covered in Principles of Finance, family transfers play a significant role in household financial planning, particularly for first-time asset acquisition.

What Lenders Require: The Gifted Deposit Letter

Every lender that accepts a gifted deposit will ask the donor to sign a formal gifted deposit letter (also called a gifted deposit declaration). This letter must confirm:

  • The donor’s name, address, and relationship to you.
  • The exact amount being gifted.
  • That the money is a gift, not a loan, and will not be repaid.
  • That the donor has no legal interest in the property and no right to live there.
  • That the donor understands they cannot make any future claim on the property or the funds.

Your lender or mortgage broker will usually provide a template letter. The donor must sign it, and in some cases, the lender may ask for the signature to be witnessed or for the donor to provide proof of identity.

Proof of Funds and Anti-Money Laundering Checks

Lenders are required by the Financial Conduct Authority to verify the source of your deposit under anti-money laundering regulations. For a gifted deposit, this means the lender will ask for:

  • Bank statements from the donor showing the funds in their account (usually the last three months).
  • Evidence of how the donor obtained the money (for example, savings, a bonus, an inheritance, or the sale of an asset).
  • A record of the transfer into your account (bank statement or transfer confirmation).

If the donor is gifting money they recently received themselves (such as from an inheritance or property sale), the lender may ask for further documentation to trace the original source. This process can add a few days to your application, so request the paperwork from the donor early.

How Gifted Deposits Affect Your Mortgage Application

A gifted deposit is treated as your own money for the purpose of calculating your loan-to-value (LTV) ratio. For example, if you are buying a property for £250,000 and you receive a £25,000 gifted deposit, your LTV is 90 per cent (assuming you borrow the remaining £225,000), not 100 per cent. This can unlock better mortgage rates and increase your affordability.

Read also: Joint Borrower Sole Proprietor Mortgages in the UK: Buying with Family Support

However, lenders will still assess your income and affordability independently. A larger deposit from a gift will not increase how much you can borrow if your income does not support a higher loan amount.

Some lenders apply stricter lending criteria if the entire deposit is gifted (as opposed to part-gifted, part-saved). A few lenders prefer to see that you have contributed at least a small portion from your own savings, as it demonstrates financial discipline, though this is not universal.

Common Issues and What to Avoid

The most common mistake is treating a gifted deposit informally. If the lender discovers during the application that the deposit was described as savings but was actually a gift, or if the donor later claims the money was a loan, your mortgage offer can be withdrawn.

Never accept money that is secretly a loan and declare it as a gift. Mortgage fraud is a criminal offence, and misrepresenting the source of your deposit can result in prosecution, repossession, and long-term damage to your credit file.

If the donor is gifting a large sum, be aware that while the UK does not have a gift tax, inheritance tax may apply if the donor dies within seven years of making the gift and their estate exceeds the nil-rate band. This is a matter for the donor to consider with a tax adviser, not a condition the lender imposes, but it is worth the donor being aware.

Next Steps

If you are planning to use a gifted deposit, speak to an FCA-authorised mortgage adviser or broker early in the process. They can confirm which lenders will accept a gift from your specific donor, arrange the paperwork, and ensure the documentation is completed correctly before you submit your application. Have the donor gather their bank statements and proof of funds as soon as you start your property search to avoid delays when you need to move quickly on an offer.

You can find general guidance on buying a home and deposit sources at MoneyHelper and mortgage-specific advice at MoneySavingExpert. For eligibility and specific product terms, always verify with an FCA-authorised lender or adviser for your personal circumstances (as of August 2026; requirements and policies change).

Financial Disclaimer

This article provides general educational information about gifted deposits and UK mortgage requirements. It is not regulated mortgage advice, and it is not personalised financial, lending, or legal advice. Refisage is not authorised by the Financial Conduct Authority (FCA). Eligibility, deposit requirements, documentation, and anti-money laundering checks vary by lender, product, and your individual circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage. You should consider speaking to an FCA-authorised mortgage adviser before making any decision about your mortgage or deposit arrangements.