Gifted deposit for first time buyers

Around 30% of first-time buyers receive financial help from family - most commonly for their deposit. This 'gifted deposit', often called the "Bank of Mum and Dad", is completely legitimate and widely accepted by mortgage lenders.

This guide covers what a gifted deposit is, the documentation you'll need, how the process works and common issues to watch for.

Our experienced first time buyer conveyancing solicitors can handle the gifted deposit verification and guide you through the legal requirements.

A gifted deposit is money from a relative (sometimes a friend) that goes towards some or all of your mortgage deposit.

For example, you might have saved half the deposit amount and receive the remaining money as a gift. Working out how much deposit you'll need depends on the property price and mortgage terms; see our guide on how much deposit to buy a house for detailed calculations. The gift might help you afford a higher-priced home or secure lower monthly mortgage repayments.

Gift vs loan: why it matters

The distinction between a gift and a loan is legally significant. A gifted deposit is not expected to be repaid. This matters because lenders need certainty that no one else has a financial claim on the property if you default on mortgage payments or when you sell.

You can use a loaned deposit, but mortgage lenders treat it differently. They'll need to know whether repayment is due before selling the property or at the point of sale. If it's payable beforehand, they'll treat it as a financial commitment (like car finance or credit card debt).

Who can give a gifted deposit?

Most lenders prefer gifts from immediate relatives, often refusing money from friends or distant relatives. The most common arrangement is parents helping their child - hence "Bank of Mum and Dad".

This isn't subterfuge. Provided you follow the proper procedures, it's a completely legitimate transaction and common among first-time buyers.

Lenders need documentation to confirm:

• The money is a genuine gift, not a loan that creates undisclosed debt
• No one else has claims on the property
• The funds are legitimate (anti-money laundering regulations)

Your solicitor needs the same verification to protect you legally and ensure funds are available when you exchange contracts.

Documentation from the gift-giver

Photographic ID - A valid passport or driving licence is usually required, though armed forces or police ID cards may be accepted. This proves the gift-giver's identity. Your solicitor will verify this electronically.

Proof of address - A driving licence works if not used for photo ID. Recent utility bills or council tax bills showing the gift-giver's name are acceptable. This confirms UK residency and verifies the person lives at the stated address.

Bank statements - Paper statements are best (available from banks even if the account is paperless), though PDFs from online accounts work if they clearly show account ownership. Your solicitor needs 3-6 months of statements to confirm funds are available.

Gifted deposit letter - A formal letter stating:

• The gift-giver's relationship to you and your name
• The exact amount being gifted
• That it's a non-refundable gift requiring no repayment
• The source of wealth
• That the gift-giver won't occupy the property or hold any charge, security or registered interest in it
• The gift-giver's signature

This letter confirms the money isn't a loan and the gift-giver isn't a creditor with claims on the property.

Documentation from the buyer

Receipt of funds - Provide information about how you'll receive the gift (typically bank transfer into your current or savings account). You'll need to protect this money from being spent elsewhere by ringfencing it alongside the rest of your deposit.

This may feel intrusive into your gift-giver's finances, but it ensures the amounts are legitimate and meet regulatory requirements, and that they can genuinely afford the stated amount.

Your conveyancing solicitor handles this information discreetly. Once verified, it's only shared with your mortgage lender.

1. Obtain the gifted deposit letter - This document establishes where the money comes from and confirms no one has legal claims on your property.
2. Gather identification and proof of funds - Your gift-giver provides ID, proof of address and 3-6 months of bank statements showing available funds.
3. Submit to your solicitor - Send all documents to your conveyancing solicitor for verification checks. Alternatively, put your gift-giver in direct contact with your solicitor. Your solicitor will share this information with your lender.
4. Transfer the money - Once verified, arrange for the gifted deposit to be transferred into your account and ringfence it so you don't accidentally spend it.
5. Speak with your mortgage broker or lender - With a clear picture of your total deposit (savings plus gift), you can confirm the best mortgage product for your needs.

Gifted deposit from abroad - You can still receive gifts from overseas residents, but it adds complexity. Your solicitor will need additional documentation and checks involving authorities in the gift-giver's country. This extends the timeline, so prepare all documentation as early as possible.

Multiple gift-givers - If several people are contributing, each needs separate documentation (ID, proof of address, proof of funds and gifted deposit letter). Your solicitor must verify each person individually, which takes longer. If any gift-giver lives abroad, additional checks apply.

Last-minute gifts - If a relative offers a gift after you've started the buying process, inform your solicitor immediately. They'll need to complete the standard verification process, which could cause delays.

Insufficient bank statements - Gift-givers sometimes struggle to provide three months of statements quickly. As soon as you know you're receiving a gifted deposit, ask them to request these from their bank. You can't proceed without them.

Gift-giver with poor credit - This shouldn't affect you if they have provable funds available. However, your mortgage lender may query this, potentially causing delays. Your solicitor can handle these sensitive matters directly with your gift-giver if preferred.

Because of the legal processes involved, you need a conveyancing solicitor who handles gifted deposits regularly. Get your free quote online, or call us on .