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Yes. A gifted deposit from a parent or close family member is accepted by almost every UK mortgage lender, and it is one of the most common ways first-time buyers reach a 10% deposit. The lender needs a signed gift letter confirming the money is a gift and not a loan, proof of where the money came from, and identity checks on the person giving it. Gifts from parents go through with the least friction; gifts from other relatives, friends or from abroad are accepted by fewer lenders and take longer.
What does a gift letter need to say?
The letter is short and most lenders have their own template or a list of what it must contain. It states the donor’s full name, address and relationship to you, the amount of the gift, that it is non-repayable, that the donor will have no interest in or rights over the property, and that they will not be living in it. The donor signs and dates it, and some lenders want it witnessed or want the donor’s ID certified. The solicitor asks for a copy too, because the gift is checked again at the conveyancing stage.
Who is allowed to gift a deposit?
Parents and grandparents are accepted by effectively every lender. Siblings, aunts, uncles and adult children are accepted by most. Gifts from friends, employers or more distant connections are accepted by a smaller number of lenders and often need an explanation of why the person is giving the money. The first-time buyer hub covers the deposit rules more widely, and if the family would rather support the purchase without handing over cash, a guarantor mortgage is the alternative.
A gift letter confirms the amount, the donor's relationship to you, and that it is non-repayable with no interest in the property
Lenders and solicitors run source-of-funds and anti-money-laundering checks on the donor as well as on you
A family loan is not a gift and counts as a monthly commitment in the affordability calculation
How does a gifted deposit work on a purchase in pounds?
Take a £300,000 purchase with a 10% deposit of £30,000, where £20,000 is a gift from parents and £10,000 is your own savings. The lender sees a £270,000 loan at 90% loan to value, exactly as it would if the whole £30,000 were yours. There is no penalty for the gift and the loan to value bands are the same. What changes is the paperwork behind the £20,000.
The lender wants the gift letter, the donor’s bank statement showing the £20,000 in their account, and usually an explanation of how it built up. Savings accumulated over years are the easiest. A recent lump sum, for example from a house sale or an inheritance, needs the document that produced it, such as the completion statement or the grant of probate. The solicitor then sees the money arrive in your account or receives it directly from the donor, and matches it to the same paper trail.
If the gift takes you to a larger deposit, the effect is on loan to value. £45,000 on the same purchase is 15%, which moves the loan into a lower band at most lenders and reduces the monthly payment. That is often the reason a family gift is offered in the first place.
What is the difference between a gift and a loan?
A gift is money you never repay. A loan, even from your parents and even interest free, is a commitment, and the lender treats it as one. Some lenders decline any deposit that is borrowed. Others accept a family loan but deduct the monthly repayment from your affordability, so a £20,000 loan repaid over five years at £333 a month reduces what you can borrow by a meaningful amount. If the money is genuinely a loan, say so. Describing a loan as a gift on the letter is misrepresentation, and the solicitor asks the donor directly.
What checks does the lender run on the person giving the money?
Anti-money-laundering rules mean the donor is checked almost as thoroughly as the buyer. The lender and the solicitor both need the donor’s photo ID and proof of address, bank statements showing the funds, and evidence of where the funds originated. The solicitor may also ask the donor to confirm they understand the gift is not repayable and that they have had the chance to take their own advice.
Gifts from abroad take longer. Foreign bank statements may need translating, the transfer has to be traced across borders, and the solicitor checks the country against sanctions and high-risk lists. Allow extra weeks rather than days, and get the money into a UK account early where possible. Some lenders will not accept gifts from certain countries at all.
Is there a tax point on a gifted deposit?
A gift of money is not taxed on receipt in the UK, so nothing is due from you. For the donor, a gift may fall within the inheritance tax rules if they die within seven years of making it. Whether that matters depends on the size of their estate and the other gifts they have made, and it is a question for a tax adviser or solicitor, not a mortgage broker. The mortgage lender does not ask about it.
What I see in practice
Use the lender’s own gift letter template wherever one exists. Most lenders have one, and a letter in their format avoids a second round of questions from the underwriter. I send the template to the donor as soon as the lender is chosen so it is signed before the application goes in.
Speak to an expert
If a relative has offered to help with your deposit, send me the amount, who it is from and roughly where the money has come from, and I will tell you which lenders will take it.
What if the person gifting wants to live in the property or keep an interest?
Then it is not a gift in the lender’s eyes. A parent who wants to live in the house, or to have their name on the deeds, or to get the money back when the property is sold, has to be part of the mortgage in a different way. Options include a joint borrower sole proprietor mortgage, where the parent is on the mortgage but not the deeds, a guarantor arrangement, or buying jointly. Each has its own affordability and age rules.
Two other things to check before relying on a gift. First, whether the lender wants any of the deposit from your own savings: a few want a minimum contribution from you even when the gift is larger. Second, whether the donor’s money is actually available now, or is tied up in a notice account or a property that has not sold. The lender and solicitor want to see it in the account before exchange, not a promise of it.
If the family are helping by selling you a property below market value, that is a concessionary purchase rather than a gifted deposit and follows different rules. How much deposit you need in total is covered in my guide to how much deposit you need to buy a house.
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