Gifted Deposits Explained for First-Time Buyers (UK Guide)

Many first-time buyers receive help from family when buying their first home. One of the most common ways this happens is through a gifted deposit.

But a lot of buyers aren’t sure how gifted deposits work or what mortgage lenders require.

This guide explains what a gifted deposit is, who can provide one, what lenders look for, and the documents you may need when using a gifted deposit for a mortgage.

⚠️ This article is for general information only and does not constitute mortgage advice. Mortgage eligibility depends on individual circumstances and lender criteria can change.

What is a gifted deposit?

A gifted deposit is money given to you — usually by a family member — to help you buy a property.

The key point is that the money must be a genuine gift and not a loan.

This means the person giving the deposit cannot expect the money to be repaid and cannot have any financial interest in the property.

Mortgage lenders require confirmation of this before approving the mortgage.

If the money is expected to be repaid, some lenders may still consider it. However, the lender will need to know the agreed monthly repayment, and this would be factored into their affordability calculations, which could reduce how much you are able to borrow.

Who can give a gifted deposit?

Most lenders accept gifted deposits from close family members, such as:

• Parents
• Grandparents
• Siblings
• Sometimes other relatives

Some lenders may also accept gifts from extended family or close friends, but this depends on the lender’s criteria.

Because rules vary between lenders, this is another situation where choosing the right lender can make a difference.

Why lenders ask questions about gifted deposits

Mortgage lenders must confirm where deposit funds have come from.

This is part of:

• Mortgage affordability checks
• Ensuring the deposit is not a hidden loan

If a deposit was actually a loan, it would affect affordability because it would be another financial commitment.

This is why lenders require confirmation that the deposit does not need to be repaid.

What is a gifted deposit letter?

A gifted deposit letter is a document confirming that the money is a gift.

Most lenders require the person giving the money to sign a letter confirming:

• Their name and relationship to you
• The amount being gifted
• That the money is not a loan (or if it is a loan, what the agreed repayment is)
• That they will have no legal interest in the property
• That they do not expect repayment

Your solicitor will usually request this as part of the purchase process.

What documents might be required?

Lenders and solicitors may ask for documents from the person providing the gift.

These can include:

• Proof of identity
• Bank statements showing the funds
• Evidence of where the money originally came from
• The signed gifted deposit letter

This helps confirm the source of funds and ensures the transaction complies with financial regulations.

Can the person giving the gift live in the property?

In some cases, lenders may ask whether the person providing the gifted deposit intends to live in the property.

Some lenders have restrictions if the person gifting the money plans to live there.

Your broker or solicitor can explain the rules depending on the lender being used.

What is a concessionary purchase?

A concessionary purchase is slightly different from a gifted deposit.

This is when a property is sold to you below its market value, often by a family member or landlord.

For example:

• The property is worth £200,000
• A family member or landlord sells it to you for £190,000

The £10,000 difference may be treated as a gifted deposit by the lender.

This type of arrangement can allow buyers to purchase with little or no cash deposit, but lenders will still need:

• Confirmation of the property’s market value
• Evidence of the relationship between buyer and seller
• Confirmation that the price reduction is a genuine gift

Are gifted deposits common?

Yes — gifted deposits are extremely common, especially for first-time buyers.

With property prices rising in many areas, family support has become one of the most common ways buyers are able to get onto the property ladder.

As long as the lender’s requirements are met, gifted deposits are widely accepted.

Final thoughts

A gifted deposit can be a helpful way for first-time buyers to purchase their first home sooner.

What matters most to lenders is that the deposit:

• Is genuinely a gift
• Is clearly documented
• Comes from an acceptable source
• Can be verified through bank statements

Understanding how gifted deposits work can help avoid delays during the mortgage process.

This article provides general information only. Mortgage eligibility and suitability depend on individual circumstances and lender criteria can change. A mortgage adviser can help explain how a gifted deposit may work in your situation.

Based in Brecon, Powys, I support first-time buyers locally and across the UK with clear, jargon-free mortgage advice tailored to their individual circumstances.

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