Gifted deposit mortgages.

A gifted deposit mortgage is where a lender allows the homebuyer to use money given to them by a family member for a deposit. Depending on the criteria of the mortgage product this could be a portion of the deposit required or the entire deposit but crucially the sum given must be declared as a ‘gift’ with no requirement for the borrower to repay the money.

No. When you apply for your mortgage the person who is gifting the deposit will need to complete a form that expressly states the funds are a gift and they will not require any repayments to be made, have no rights, interests or claims over the property and will not hold any registered legal charge over the property. It is also a condition that the person gifting money for a house deposit must not then reside in the property purchased.

If this scenario doesn’t work for you, you may consider a joint mortgage application instead. Get in touch to see if we can help you.

This will vary between lenders so you’ll need to check the different lending criteria which will apply.

At Suffolk Building Society we will usually accept gifted deposits on our standard residential mortgages from close family members (parents, grandparents, brothers, or sisters). In addition, because we recognise that families come in all shapes and sizes, we can generally also consider gifted deposits from extended family (step-parents, step-siblings, step-grandparents, applicants’ children, applicants’ step-children, applicants’ adopted children).

Yes. During the application process the person who is gifting money for a house deposit will need to submit proof the deposit monies are available in a UK-based account and make the following declarations about the funds being gifted:

• It is an unconditional and non-refundable gift.
• That no interest is to be charged.
• They do not require any repayments to be made.
• They have no rights, interests or claims in the property whatsoever.
• They do not hold any registered legal charge over the property.
• They will not reside in property now or in the future.

Additionally, should the gifted deposit exceed £100,000, the person who is gifting the funds will be required to take Inheritance Tax Advice for which they will be responsible for meeting the cost

This depends on the criteria of the mortgage lender and can also vary on a per-product basis.

For example, at Suffolk Building Society our standard residential mortgage products are available for use with a gifted deposit up to 90% loan to value, where the monies are from a close family member or a combination of gifted and personal funds.

However where the full amount is gifted and the mortgage required is at 95% loan to value we also require evidence of 12 months of continuous rental history for the applicant.

Often you can use a gifted deposit for a shared ownership mortgage, although again this will vary and you’ll need to check product details carefully. For more information about this part-buy, part-rent scheme in general visit our shared ownership page.