Gifted Deposit Mortgage: How a Gifted Deposit Can Help You Secure the Home You Want
Saving for a deposit can feel like one of the biggest hurdles in buying a home. For many buyers — especially first-time buyers — a gifted deposit mortgage can make the process far more achievable.
If a family member or loved one is able to help you financially, lenders are usually comfortable with that — as long as it’s a genuine gift, not a loan. In this guide, we’ll explain how gifted deposits work, who can provide one, and how to prepare the right paperwork to make your mortgage approval smoother.
What Is a Gifted Deposit Mortgage?
Quick answer:
A gifted deposit mortgage allows you to use money that’s been gifted — usually from a parent or relative — towards your property deposit. The key is that the money is given freely, with no expectation of repayment.
Lenders will only accept this if the funds are clearly declared as a gift, not a loan. They’ll want written confirmation from the person providing the funds, often called a gifted deposit letter.
This approach has become increasingly common as property prices have risen, helping many buyers get onto the ladder sooner.
Who Can Gift a Deposit for a Mortgage?
Most lenders accept gifted deposits from close family members such as:
- Parents
- Grandparents
- Siblings
- Step-parents
- Sometimes partners or spouses
Some lenders also accept gifts from close friends, but these cases usually require more documentation. The closer the relationship, the smoother the process tends to be.
The funds must come from a legitimate source — such as savings or the sale of an asset — and cannot come from someone involved in the sale (like the seller or estate agent).
How Does a Gifted Deposit Mortgage Work?
When applying for a gifted deposit mortgage, the lender needs to verify three things:
- The relationship between you and the person gifting the funds
- Proof of the source of the money (bank statements or savings history)
- Confirmation that the funds are a gift, not a loan
You’ll provide this through a gifted deposit letter, plus supporting documents from the donor. Once the lender is satisfied, the funds can be transferred to your solicitor’s account ready for completion.
How Much Can Be Gifted for a Deposit?
There’s no set legal limit on how much can be gifted. It could be a few thousand pounds to top up your savings, or the full deposit amount.
A larger gifted deposit can make a big difference. It lowers your loan-to-value (LTV) ratio, which can unlock:
- Lower interest rates
- More lender options
- Stronger affordability outcomes
For example, with a 10% gifted deposit, you may access better rates than a 5% deposit buyer — and with 15–20%, you could access some of the best deals available.
What Is a Gifted Deposit Letter and Why Do You Need One?
A gifted deposit letter is a declaration from the person gifting the funds. It confirms that:
- The money is a gift, not a loan
- There is no claim or ownership over the property
- The donor understands the funds won’t be repaid
It typically includes:
- The donor’s name, address, and relationship to you
- The amount being gifted
- The property address being purchased
- A signed declaration that it’s an unconditional gift
Your lender and solicitor will both require this before the mortgage completes.
Can You Get a Mortgage with a Fully Gifted Deposit?
Yes — it’s entirely possible to get a mortgage with a fully gifted deposit.
Many first-time buyers rely on family help to cover 100% of their deposit, and lenders accept this every day. The crucial part is providing full transparency and the correct documentation.
Some lenders may prefer you to contribute a small portion yourself (for example, 5%), but plenty will approve mortgages entirely funded by a gift.
What Proof Do Lenders Need for a Gifted Deposit Mortgage?
To prevent fraud and confirm the money’s origin, lenders usually ask for:
- A signed gifted deposit letter
- Photo ID and proof of address for the donor
- Bank statements showing the funds are available and being transferred
- Evidence of transfer to your solicitor or account
We help clients gather and present all of this clearly to ensure there are no delays with their gifted deposit mortgage approval.
Can I Use a Gifted Deposit from a Friend?
It’s possible, but not all lenders accept this.
If the donor is not a relative, the lender will typically request:
- A detailed explanation of your relationship
- Additional checks under anti-money laundering rules
- Confirmation that there’s no financial interest in the property
Working with a broker who understands which lenders are open to friend-based gifts is key here — it can save time and prevent unnecessary rejections.
Can a Gifted Deposit Be Used for a Buy-to-Let Mortgage?
In most cases, no.
Buy-to-let lenders usually expect the deposit to come from your own savings or equity.
That’s because buy-to-let is considered an investment, and lenders prefer borrowers to have a personal financial stake in the property.
However, if it’s a joint purchase with a family member who’s also named on the mortgage, there can be exceptions.
Are Gifted Deposits Taxable?
The person receiving the gift doesn’t pay any tax.
The person giving the money may need to consider inheritance tax (IHT) rules.
If they gift more than £3,000 in a year and pass away within seven years, part of that amount could be counted as part of their estate for IHT purposes.
For most families, this isn’t an issue, but it’s always sensible to be aware — especially for larger gifts.
How Can a Gifted Deposit Help You Secure a Mortgage?
A gifted deposit can significantly improve your chances of mortgage approval because it:
- Reduces your borrowing amount
- Lowers your LTV ratio
- Improves your interest rate options
- Strengthens your affordability position
For many buyers, it’s the helping hand that turns “almost ready” into “offer accepted.”
If you’d like to explore how a gifted deposit mortgage could work for you, we’re happy to help.
Final Thoughts
A gifted deposit mortgage can open the door to homeownership sooner — especially for first-time buyers who might otherwise struggle to save a large deposit.
As long as the funds are genuine, documented, and declared properly, most lenders are very comfortable accepting gifted deposits.
At Mortgage Bridge, we’ll guide you through every step — from drafting the gift letter to matching you with a lender who fits your circumstances perfectly.
We’re here to help you move forward with confidence.