Getting a foot on the property ladder isn’t easy, especially with rising house prices and living costs. For many first-time buyers in England and Wales, a gifted deposit from a family member could be the boost they need. But while it sounds simple, there are legal and financial steps that must be followed to keep the process smooth.
What Is a Gifted Deposit – and How Does It Work?
A gifted deposit is money given, not loaned, to a homebuyer to help with a property purchase. Most commonly this comes from parents or grandparents. The key point is that it’s a gift: there’s no expectation of repayment and no claim to ownership in the property.
Who Can Gift You a Deposit?
Not just anyone can contribute. Most mortgage lenders will only accept gifted deposits from close family – think parents, siblings, grandparents. Gifts from friends or extended relatives may be accepted but can require additional scrutiny. Always check with your lender or solicitor first.
You’ll Need a Gifted Deposit Letter
Lenders don’t just take your word for it. A formal letter is usually required, clearly stating:
- Who is giving the gift
- How much they are gifting
- Their relationship to the buyer
- That the money is not a loan
- That they have no stake in the property
- That they are financially solvent
This letter is a vital part of reassuring the lender that you’re not taking on hidden debt.
Proving It’s Legit: Identity and AML Checks
As part of anti-money laundering regulations, the person giving the money will need to show ID, proof of address, and demonstrate where the funds came from. That could include savings statements or evidence of asset sales. Your solicitor will guide you through this.
Get in Touch for Support
At Dudden Law, we support first-time buyers and their families through the gifted deposit process. From preparing the right paperwork to liaising with mortgage providers and ensuring full compliance, we help you avoid costly mistakes.
If you’re planning to use a gifted deposit or have questions about how it works, get in touch with our conveyancing team today.
Written by
Aimmee Gregory
Head of Conveyancing
