What Is a Gifted Deposit?
Saving for a deposit is often one of the biggest hurdles for first-time buyers.
With rising property prices and the increasing cost of living, many buyers receive financial help from family members to get onto the property ladder. This is known as a gifted deposit.
What is a gifted deposit?
A gifted deposit is money given to you by a family member or, in some cases, another eligible person, to help towards the deposit on your property purchase.
The key word is "gifted". The money must be given without the expectation of repayment. If the money is actually a loan that will need to be paid back, it may affect your mortgage application and should be disclosed to your lender.
Who can gift a deposit?
This varies between lenders, but gifted deposits are most commonly provided by:
Parents
Grandparents
Siblings
Other close family members
Some lenders may also accept gifted deposits from other individuals, but their criteria can differ significantly.
Will lenders accept a gifted deposit?
Many lenders do accept gifted deposits, particularly for first-time buyers. However, they will want to understand where the money has come from and ensure that it is genuinely a gift rather than a loan.
Lenders typically require evidence before approving a mortgage application involving a gifted deposit.
What documents are usually required?
While requirements vary between lenders, you will often be asked to provide:
A gifted deposit letter confirming the money is a gift
Proof of identity from the person gifting the funds
Evidence of where the funds originated
Bank statements showing the transfer of funds
Your solicitor will also carry out checks as part of anti-money laundering regulations.
Does a gifted deposit affect your mortgage options?
Not necessarily.
Many lenders are comfortable with gifted deposits, but some have stricter criteria than others. This is why speaking to a mortgage broker can be particularly helpful if you're using gifted funds, as they can identify lenders that are most suitable for your circumstances.
Things to consider
Before accepting a gifted deposit, it's worth having an open discussion with the person providing the funds. Everyone should be clear that the money is a gift and understand any requirements that may arise during the mortgage process.
Need advice on using a gifted deposit?
Every lender has different criteria, and the documentation required can vary. If you're planning to use a gifted deposit towards your home purchase, speaking to a mortgage broker early in the process can help ensure everything runs smoothly.
Get in touch with our team to discuss your options and find out how a gifted deposit could help you get onto the property ladder sooner.