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Gifted deposits

Gifted deposits

A gifted deposit is a sum of money that is given by a family member forming all or part of a deposit for somebody wanting to buy a property. It is possible for friends to gift money to enable someone to buy a property, but is less favourable for lenders.

There are some points to consider:

  • The person gifting the money should seek independent legal advice to understand they will have no interest in the property and no right to get their money back.
  • It is possible to loan money to family and have it repaid on sale of the property i.e. take a legal charge over the property. Again, seeking independent legal advice is a must.
  • The mortgage product won’t change because of the gifted deposit (pretty much all lenders are ok with family gifts but not many are ok with 3rd party gifts (friends).
  • The person gifting the money will need to complete a gifted deposit letter or sometimes lenders have their own form to complete.
  • The lender and or solicitor may wish to see a bank statement or something to confirm where the gifted money is coming from (standard money laundering checks).
  • The gifted deposit can be used in conjunction with the applicant’s own savings or the help to buy scheme.
  • Alternatives to gifting money may be to deposit money with a bank or building society for a period of time (i.e. the new Barclays mortgage product).

Impartial Mortgage Advice

No matter how much you are able to save there will be options available to you but these will all depend on your individual circumstances. To discuss what choices are available to help you get on the housing ladder, you can speak to Which? Mortgage Advisers by calling us on 0800 980 3892 – or request a call back.

If you’re buying your first home the Which? Guide Buying a house: first time buyers may be helpful as well.

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