Last reviewed: May 2026
A gifted deposit is money given by a family member to use as all or part of your mortgage deposit. Most lenders accept them, providing the gift is properly documented. This guide explains what lenders need, who can gift, and how the process works.
Initial discussion at no cost. Broker fee applies only if you choose to proceed.
A gifted deposit is money given by a family member to use as all or part of your mortgage deposit, with no expectation of repayment. Most mortgage lenders accept gifted deposits, providing the donor signs a gift letter confirming the money is not a loan and they have no interest in the property. Your solicitor will also carry out identity and source of funds checks on the donor as part of their legal obligations.
A gifted deposit is money given to a first time buyer by a family member to use as all or part of their mortgage deposit. The critical point is that the money must be a genuine gift with no expectation of repayment and no interest in the property.
If a family member wants to help but expects repayment at some point, this is a loan, not a gift. Most lenders will not accept a loan as a deposit unless it is a formal secured loan that is declared and factored into your affordability assessment. It is important to be clear with your lender and solicitor about the nature of the arrangement.
Lenders have different rules about who they will accept a gifted deposit from. Most accept gifts from close family members. The further the relationship, the more likely a lender is to question or decline it.
Parental and grandparental gifts are accepted by the vast majority of lenders. These are the most straightforward gifted deposit arrangements. Lenders are familiar with the pattern and have clear processes for documenting them.
Sibling gifts are accepted by many lenders, though not all. Gifts from aunts, uncles or more distant relatives may be accepted by some lenders on a case-by-case basis. An adviser can identify which lenders are likely to be suitable for your specific donor relationship.
Most lenders will not accept gifted deposits from friends, colleagues or employers. This is due to the anti-money laundering requirements around unusual financial transfers. If your situation involves a non-family donor, speak to an adviser before proceeding.
The process for a gifted deposit mortgage follows the same stages as any mortgage, with additional documentation required to evidence the gift. Here is how it works from start to keys.
Before anything else, speak to a whole-of-market adviser. We confirm your borrowing capacity, identify which lenders are likely to accept your gifted deposit arrangement, and advise on what documentation will be needed.
We obtain a mortgage in principle from a suitable lender. This confirms the amount you can borrow in principle and lets sellers know you are a serious buyer ready to proceed. Can usually be arranged within a day or two.
Once your offer is accepted, we help coordinate the gift documentation: the signed gift letter from your donor, their bank statements showing the funds, and their ID for solicitor anti-money laundering checks.
We submit the full mortgage application to the lender with all supporting documentation. The lender assesses affordability, carries out a valuation, and issues a formal mortgage offer once satisfied.
Lenders and solicitors both require documentation to verify that a deposit is a genuine gift. Here is what is typically needed from both the buyer and the donor.
Lenders want to see that the gift money is actually in the donor's account and has been there for a reasonable period. A large amount appearing shortly before the mortgage application with no clear explanation may be questioned. If the funds come from a recent property sale, inheritance or other significant event, make sure that documentation is available too.
A gifted deposit letter, also called a gift letter or gifted deposit declaration, is the key document that confirms the money is a genuine gift. Most lenders have their own template or specific requirements for what it must contain.
Most lenders require the gift letter to be signed by the donor and contain all of the following. Your solicitor or mortgage adviser will confirm the exact requirements for your specific lender.
Different lenders may have additional requirements or their own specific wording. Your adviser will confirm exactly what your chosen lender needs before the letter is signed.
Most gifted deposit applications that run into difficulty do so for avoidable reasons. These are the mistakes that cause delays or rejections.
If there is any informal agreement to repay the money, even between family members, this is a loan. Declaring it as a gift is a misrepresentation to the lender. If discovered, it can result in the mortgage being withdrawn. Be honest about the nature of the arrangement from the start.
Waiting until after an offer is accepted to start gathering the gift documentation is a common cause of delay. The gift letter needs to be signed, bank statements obtained, and donor ID verified. Start this process as early as possible, ideally before you begin making offers.
Not all lenders accept all donor relationships. Applying to a lender who does not accept sibling gifts, for example, after putting in a full application wastes time and leaves a credit footprint. An adviser identifies the right lender for your specific situation before any application is submitted.
Donors who are not expecting identity checks and source of funds requests can be surprised or put off by the process. Explain clearly to your donor early on that these checks are a legal requirement, not a reflection of any suspicion. An unprepared donor who delays providing documents can hold up the entire transaction.
For larger gifts, particularly where the donor is older or in poor health, the seven-year inheritance tax rule is worth understanding before the gift is made. Seeking qualified tax advice before a large transfer is made, rather than after, gives more options for structuring the arrangement appropriately.
Your solicitor is legally required to carry out anti-money laundering checks on all funds used in a property purchase, including any gifted deposit. This applies regardless of the relationship between donor and buyer.
The donor must provide photographic ID (passport or driving licence) and proof of address. This is the same verification required of all buyers and sellers in a property transaction.
The solicitor must be satisfied that the funds come from a legitimate source. Bank statements showing where the money came from are required. If funds originate from a recent inheritance or property sale, that documentation may be needed too.
The solicitor reviews the gift letter to confirm it meets requirements and that the terms are clear. They will flag any concerns to the lender. The gift funds are usually transferred directly to the solicitor ahead of exchange.
Solicitor checks can feel intrusive for donors who simply want to help a family member buy a home. It is worth explaining to your donor early in the process that these checks are a legal requirement and apply to everyone, not a reflection of any concern about them specifically. Most donors find the process straightforward once they understand what is needed and why.
Gifts made within seven years before a donor's death may be included in their estate for inheritance tax purposes. The tax treatment depends on several factors and for larger gifts, donors should seek advice from a qualified tax adviser.
This section provides general information only and does not constitute tax advice. Inheritance tax treatment depends on individual circumstances including the donor's overall estate, exemptions already used, and the timing of the gift. Donors considering larger gifts should consult a qualified tax adviser before proceeding.
Gifts made more than seven years before the donor's death are generally outside the estate for inheritance tax purposes, subject to the donor's overall position and any conditions attached.
Gifts made between three and seven years before death may attract inheritance tax, but taper relief reduces the amount owed on a sliding scale. The earlier in this window the gift was made, the lower the potential charge.
Gifts made within three years of the donor's death may be subject to inheritance tax at the full rate, subject to the nil-rate band and any available exemptions. The amount depends on the donor's overall estate.
Each person has an annual gift exemption of £3,000 per tax year that falls outside the estate regardless of when the donor dies. Both parents each have this exemption. Unused exemptions from the previous year can also be carried forward. For modest gifts this may cover the full amount. For larger gifts, the seven-year rule and taper relief are the relevant considerations. A tax adviser can confirm your donor's specific position.
A gifted deposit is not the only way a family member can help you buy. A guarantor mortgage is an alternative where a family member supports your borrowing rather than contributing funds directly.
Some families use both: a gift towards the deposit combined with a guarantor arrangement to support borrowing capacity. Which approach works best depends on your income, the amount of help available, and the lenders you are eligible for. An adviser can confirm which combination is most suitable for your circumstances. See our Guarantor Mortgage guide for a full explanation.
Gifted deposit mortgages require a bit more coordination than standard applications. Here is exactly what we do to make the process straightforward for you and your donor.
Initial discussion at no cost.
We can confirm which lenders are most likely to accept your gift arrangement, coordinate the documentation, and manage your application from start to formal mortgage offer.
£299 broker fee payable only if you choose to proceed after your formal mortgage offer. Solicitor and other third-party costs apply separately. Full details in our disclosure below.
Speak to a Mortgage AdviserRegulatory disclosure: Woodhall Mortgages is authorised and regulated by the Financial Conduct Authority (FRN 762513). We consider a comprehensive range of mortgages from across the market, but not all lenders or products may be included.
Broker fee: A £299 broker fee is payable only if you choose to proceed after receiving a formal mortgage offer. This fee is non-refundable once charged. We may also receive commission from the lender. Solicitor, valuation and other third-party costs apply separately and are not included in our fee.
Tax information: The inheritance tax content on this page is general information only and does not constitute tax advice. Tax treatment depends on individual circumstances. Donors considering large gifts should seek independent advice from a qualified tax adviser before proceeding.
Risk warning: Your home may be repossessed if you do not keep up repayments on your mortgage.
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