How does a Gifted Deposit mortgage work?
In order to access a mortgage, you will need to have saved a deposit to put down on your home. The larger deposit you have, the more property you can potentially buy. You will also have access to lower rates if you have a larger deposit. This is because you will have what is called a lower loan to value.
It can be a struggle to save for a deposit which is why many look to family or friends to help them. This is where a gifted deposit can be useful.
These are the things you need to know if you are considering a Gifted Deposit Mortgage:
- The money must be a gift and cannot be a loan
- The person gifting you the deposit must write a letter stating that it is a gift. This is called a gifted deposit letter.
- As part of money laundering regulations, the person gifting you the deposit must be able to evidence the source of the money
- Usually, there is no limited to the amount of money someone can gift to you
- Often, the person gifting the deposit to you is a family member, but it can also come from someone like a god parent or even a friend.
- They can gift you the whole deposit or part of it if you have savings to contribute
- There may be inheritance tax implications for the person gifting you the deposit. So it might be worth them speaking to a financial adviser first.
There are other options available other than a gifted deposit that you might want to consider. You might also want to look at Shared Ownership mortgages, JBSP mortgages and the Forces Help to Buy Scheme.
At Your Mortgage Expert, we can talk you through all the options available and help you decide what is the most appropriate mortgage for your circumstances.
Speak to one of our experienced mortgage brokers today for Gifted Deposit Mortgage Advice.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
Who can gift a deposit?
A gifted deposit is often provided by parents, but it can sometimes come from other family members too. Depending on the lender, gifted deposits may also be accepted from grandparents, siblings or other relatives. In some cases, lenders may be willing to consider gifts from other people, but the criteria can vary.
Because lender rules are not all the same, it is important to check early on whether the person helping you with your deposit will be acceptable to the lender you are considering. This can help avoid delays later in the process.
What documents are usually needed for a gifted deposit?
When a gifted deposit is being used, lenders and solicitors will usually want to see documents confirming where the money has come from and that it is genuinely a gift.
This often includes:
- A gifted deposit letter
- Proof of identity for the donor, where required
- Evidence of the source of funds
- Bank statements showing the build-up or location of the money
- Confirmation that the money is a gift and not repayable
The exact documents can vary, but getting these together early can make the process much smoother.
Common gifted deposit issues
Gifted deposits are common, but they can still create delays if the detail is not handled properly.
Some of the most common issues include:
- The money is intended as a loan rather than a gift
- The donor cannot easily evidence the source of the funds
- The lender has restrictions on who can provide the gift
- Extra checks from the solicitor slow the process down
- There is confusion about whether the donor will have any interest in the property
This is one reason why it helps to understand the lender’s requirements before you apply.
Gifted deposits for first time buyers
Gifted deposits are especially common for first time buyers, particularly where saving the full deposit alone would take longer or make buying feel out of reach.
For many buyers, support from family can make it possible to get onto the property ladder sooner, but it is still important to make sure the mortgage, deposit and paperwork all line up properly. We can help you understand what may be possible and what steps are likely to be involved.
Why use Your Mortgage Expert for gifted deposit mortgage advice?
Using a gifted deposit can be straightforward in principle, but the paperwork and lender checks still need to be handled properly.
- Clear advice on lender gifted deposit requirements
- Help understanding what documents may be needed
- Support for first time buyers and family-assisted purchases
- Friendly guidance from enquiry through to completion
- Appointments by phone, video or in person
If you are using a gifted deposit and want clear mortgage advice tailored to your circumstances, we would be happy to help.