Back

Can my parents gift me money for a house deposit

Feb 13, 2024
Can My Parents Gift Me a Deposit for a House
If you’re struggling to save for a deposit, your parents can help you onto the property ladder by gifting you money. Financial help of this kind is known as the ‘Bank of Mum and Dad’. This guide explains what gifted deposits are, how they work and other low-deposit schemes you could be eligible for.

What is a Gifted Deposit?

A gifted deposit is a sum of money given—typically by a family member—to help someone purchase a home, usually by contributing to or covering the entire deposit. Unlike a loan, this money is given with no expectation of repayment.

While it can be a powerful way to support first-time buyers or those struggling to save, it’s not as simple as transferring funds. Lenders require formal documentation to confirm the money is a genuine gift, not a loan, and that the giver has no legal claim to the property. Understanding the rules and requirements around gifted deposits is essential to avoid delays or complications during the mortgage process.

 

How Does a Gifted Deposit Work?

Using a gifted deposit involves more than simply receiving money—it requires clear documentation and compliance with legal and lender requirements. Here’s how the process typically works:
 
1. Provide a Gifted Deposit Letter: The person giving the gift must sign a gifted deposit letter (also known as a declaration letter). This confirms that the money is a gift, not a loan, and that there is no expectation of repayment or ownership rights over the property. Lenders require this to ensure the buyer is not taking on hidden debt.
 
The Gifted Deposit Letter should include the following information:  
 
  • Your parents’ names
  • Your name
  • The amount of money gifted
  • The source of the money 
  • The nature of your relationship
  • Confirmation that it’s a gift that doesn’t require repayments
  • Evidence that your parents are financially able to support 
 
2. Submit Identification from the Giver: Your solicitor or conveyancer will usually need proof of identity from the person gifting the money. This helps verify the source of funds and comply with anti-money laundering regulations.

Typically, this includes:
• A valid photo ID (e.g. passport or driving licence)
• Two separate proofs of address (e.g. utility bill, bank statement, or official correspondence)
 
3. Show Proof of Funds: The donor must also provide evidence of where the money came from. This could be from savings, the sale of an asset, inheritance, or another legitimate source. If the funds have been transferred from another account or accumulated over time, additional documentation may be required to trace the origin of the money.


Each lender and solicitor may have slightly different requirements, so it’s important to check early in the process to avoid delays.
 
 

Can I Use a Gifted Deposit as a First-Time Buyer?

Yes, first-time buyers can absolutely use a gifted deposit to help purchase their first home. In fact, it’s a common way for parents or close relatives to support younger buyers who may struggle to save a full deposit on their own. Most mortgage lenders accept gifted deposits, provided the money is genuinely a gift with no expectation of repayment.

You’ll need to provide a gifted deposit letter and supporting documents to satisfy your lender’s and solicitor’s requirements. As long as the gift is properly documented and the source of funds is clear, using a gifted deposit can significantly boost your chances of securing a mortgage and getting on the property ladder sooner.
 
 

What are the tax implications of a gifted deposit?

Your parents can gift you up to £3,000 yearly without tax implications. If they give you more money towards a deposit and they pass away within seven years, you must pay inheritance tax.  
  
 

What other options are there for first-time buyers? 

There are more low-deposit schemes available to help you buy your first home.  
 

Parent Power 

With our Parent Power scheme, whatever your family or friends contribute, we could match it up to a maximum of 5% of the purchase price. 
 

Deposit Unlock  

 
Deposit Unlock lets you buy your new home with a 5% deposit on mortgage products up to £750,000.  
 

Deposit Boost 

 
Already have a 10% deposit? With Deposit Boost, we can boost it by 5%, meaning you’ll need an 85% mortgage. 
 
Browse our brand-new properties across the UK and unique homebuying offers. Call our Sales Advisers today to reserve your new home.
 

Related Articles

OSZAR »