← Mortgage guides

Deposit sources

Gifted deposit for a mortgage

Family gifts are common on UK purchases. They are also a frequent source of friction when the donor, the paperwork or the money trail does not fit lender and anti-money-laundering expectations. Property Money Limited — general information only, not advice.

The problem

Cash in the buyer’s account is not enough. Lenders and solicitors need to know who gave it, why, whether it is a true gift (not a disguised loan), and whether the source is acceptable. The wrong donor relationship or a muddy trail can delay or kill a case that looked fine on LTV alone.

What usually matters

• Family vs non-blood relative. Parents and close family gifts are the everyday path. Gifts from friends or distant non-blood relatives are more often declined or heavily scrutinised.
• Donor to reside. If the donor will live in the property, many lenders treat that as a different product problem (occupancy, beneficial interest), not a simple gifted deposit.
• Builder gifted deposit. Incentives and builder gifts have their own rules; some are treated as reducing the effective purchase price or are restricted by product.
• Deposit from outside the UK. Possible with a clean trail and compliant FX/source evidence — slower and document-heavy. Expect questions.
• Crypto. Many lenders will not accept crypto-realised funds without a clear fiat trail and time seasoning; some will not accept them at all.
• Limited company. Company funds as a “gift” raise director-loan, dividend and purpose questions. Often unacceptable as a personal gifted deposit without a proper corporate route.
• Acceptable vs unacceptable sources. Savings, genuine family gifts with letters, and documented inheritance are the usual clean paths. Undocumented cash, unexplained third-party payments and circular loans are not.

Paths that often help

• Gift letter stating the amount, relationship, that it is non-repayable, and that the donor has no interest in the property — plus ID and source-of-funds evidence for the donor.
• Bank statements showing the money move from donor to buyer (or to the solicitor) without unexplained hops.
• If the donor will not reside and is close family, say so clearly; do not leave occupancy ambiguous.
• For overseas or complex sources, start the trail early — conveyancers and lenders will not compress AML into the week of exchange.

Mortgagability in plain terms

A gifted deposit helps mortgagability only when the lender accepts the donor, the gift terms and the source documents. The cash amount is necessary; it is not sufficient. Relationship, living arrangements and paperwork sit alongside the figure.

Timing and the solicitor

Source-of-funds checks sit with the conveyancer as well as the lender. Even if a lender is comfortable, the solicitor may still ask for more documents before exchange. Build time for that into the purchase timeline, especially on a short chain or a new-build deadline.

If several family members are chipping in, expect a letter and trail for each gift. If the donor needs to sell investments or move money from overseas first, start that process before you are under pressure on dates. Never invent a story to make the money look simpler than it is — a slower, honest trail beats a neat fiction.

Once the purchase is in view, protection for the people in the home is a separate question. The protection gap tool is optional and illustrative.

Inheritance and genuine savings from employment are usually the cleanest non-gift paths when documented. Pooling money from several friends via cash apps without a paper trail is the opposite. If a donor borrowed the gift themselves, say so — some lenders will not accept gifted funds that originated as a loan to the donor.

Where the purchase is shared ownership or involves a housing association, gift rules can be stricter still. Flag the tenure early so you are not modelling a deposit path that the product will not allow.

Next step

Name the donor relationship and where the money sits today. That usually tells you whether you are on a routine path or a specialist conversation.