What Is a Gifted Deposit?

A gifted deposit is a sum of money given to you by a third party — usually a parent or close relative — to use toward the deposit on your home, where the giver expects nothing back and takes no legal interest in the property. Once that’s confirmed, the lender treats the gifted money as your own equity, exactly as if you’d saved it yourself.

It’s now a mainstream part of how people buy: the “Bank of Mum and Dad” helps a very large share of first-time buyers, and a gift can be transformative — pushing your deposit from 5% to 10%, for example, unlocks better rates and a wider choice of deals (as we explain in how much you can borrow). A gift can cover part or even all of your deposit.

Which Mortgage Lenders Accept Gifted Deposits?

This is the question most people arrive with, and the reassuring headline is: the majority of UK lenders accept gifted deposits — including all the major high-street names — provided the gift comes from an acceptable donor and the paperwork is in order. Where lenders differ is at the edges:

• Close family gifts (parents, grandparents, siblings) are accepted almost universally.
• Wider family (aunts, uncles, in-laws) is accepted by many, but not all.
• Friends or non-family donors narrow your options significantly — some lenders (NatWest, for example) accept third-party gifts including friends with the right documentation, but many won’t.
• Lender-specific quirks: some require a formal gifted-deposit form over a certain amount, others just a confirmation letter — details vary by lender.

So the practical question isn’t really “do lenders accept gifts?” (most do) but “which lender best fits my donor and situation?” — especially if your donor isn’t immediate family or is based overseas. That lender-matching is exactly where a broker saves you from applying to the wrong lender and being declined.

Who Can Gift a Deposit?

Every lender sets its own list, but the typical hierarchy of acceptability (as of 2026 — confirm current):

There’s also no legal cap on how much can be gifted — lenders don’t mind whether it’s £5,000 or £500,000, as long as the funds are legitimate and evidenced. Gifts of £100,000+ are entirely normal; the underwriter just wants clean paperwork. Multiple donors (say both parents, plus grandparents) are fine too — each simply provides their own separate gift letter and source-of-funds evidence.

The Gifted Deposit Letter

This is the cornerstone document. Your broker, solicitor or lender will provide a template, and the donor signs it (some lenders want it independently witnessed). It must clearly state:

• The donor’s name(s) and your name.
• The amount being gifted.
• The relationship between donor and recipient.
• That it’s a genuine gift — non-repayable, with no interest charged.
• That the donor retains no stake or interest in the property and won’t be living there.
• That the donor is financially able to make the gift (solvent).

Proving the Source of Funds (AML Checks)

Since AML scrutiny tightened in recent years, lenders and conveyancers must now evidence where the money came from — not just confirm it exists. Expect the donor to provide:

• Photo ID and proof of address (the conveyancer’s AML duty extends to the donor).
• Bank statements — typically 3–6 months (sometimes up to 12) showing the funds.
• Source of funds / source of wealth — how the money was accumulated: long-term savings, a property sale, an inheritance (with grant of probate), a pension lump sum, or investment growth.
• Evidence of transfer — the bank record of the money moving from the donor to you.

Gifts from overseas donors add complexity — certified ID, translated statements, and proof the funds are legitimate; some high-risk jurisdictions are declined outright. It’s very doable, but it narrows the lender pool and rewards starting early.

Gift vs Loan — Get This Right

The distinction is critical, because it changes everything about your application:

Tax and the 7-Year Rule

Good news first: there’s no immediate tax on a gifted deposit — a cash gift from one UK individual to another isn’t income for you or a chargeable gain for the donor. Gifted deposits are also fully compatible with first-time buyer stamp duty relief. The one thing to be aware of is inheritance tax (IHT):

• If the donor dies within 7 years of making the gift, it may count as part of their estate for IHT purposes (a “potentially exempt transfer”).
• Most gifts fall comfortably within the donor’s nil-rate band (£325,000 per person, plus a residence nil-rate band of up to £175,000 where applicable), so in practice IHT is rarely due — but for large gifts, it’s worth the donor taking tax advice.

This is general information, not tax advice — IHT depends on the donor’s whole estate, and anyone gifting a large sum should speak to a tax adviser or solicitor.

Mistakes That Stall a Gifted-Deposit Application

Almost every gifted-deposit problem is avoidable. The usual culprits:

• Last-minute funds — money landing days before completion looks like a red flag; get it in your account weeks ahead.
• Cash gifts — no audit trail; always a bank transfer.
• Wording it as a loan — the letter must say “gift.”
• Donor can’t evidence the money — £40k “from various places” is a problem; consolidate into one account with clear provenance in advance.
• Late disclosure — declare the gift at application, don’t wait to be asked.
• Non-family donor applied to the wrong lender — check acceptance before applying.

Get the donor’s ID, statements and signed letter ready up front and the compliance stage is painless. If your deposit gift is complicated — non-family, overseas, or part of a bigger picture with credit issues — a broker who places these cases regularly is the difference between a smooth completion and weeks of avoidable queries.

Frequently Asked Questions