A gifted deposit is the most common way UK first-time buyers bridge the gap between savings and a meaningful deposit. The “Bank of Mum and Dad” funded an estimated one in four first-time-buyer purchases in 2025. The mechanism is simple: a family member transfers money, you put it toward a deposit, and the lender treats it as part of yours—provided the paperwork tells the right story.
The letter is the formality. What follows is a template, the supporting documents lenders and conveyancers actually ask for, and the source-of-funds checks that almost always trip first-time buyers up the first time round.
Why lenders require a gifted deposit letter
Mortgage lenders check the deposit’s source as part of their anti-money-laundering (AML) and affordability work. The gifted-deposit letter answers two questions in writing:
- The money is a gift, not a loan—meaning the giver is not expecting repayment, which would otherwise count as an undisclosed debt against your affordability.
- The giver is not claiming any legal interest in the property—meaning they have no claim if the property is later sold.
Without the letter, the lender treats the funds as suspicious or as a loan, and either declines the application or reduces the offer. The letter exists to make those two answers unambiguous.
What the letter must contain
Every UK lender’s requirement looks broadly similar. The minimum:
- Full name and address of the giver.
- Full name of the recipient(s)—you and any joint applicants.
- The amount being gifted, in pounds.
- The address of the property being purchased.
- A statement that the money is a gift, not a loan.
- A statement that the giver has no interest in the property and will not claim any.
- A statement that the giver does not require repayment.
- The giver’s signature and date.
- A note that the giver has sufficient funds to make the gift (some lenders explicitly).
Some lenders additionally want:
- The giver’s relationship to the recipient.
- The giver’s bank details so the conveyancer can verify the source.
- A statement that the giver is solvent—not bankrupt or in IVA.
Always check your specific lender’s template; most provide one in the application pack and will reject substitutes if a required clause is missing.
A template you can use
The template below meets the requirements of most major UK lenders in 2026. Adapt it to the specifics of your purchase.
[GIVER'S FULL NAME]
[GIVER'S FULL ADDRESS]
[Date]
To: [LENDER NAME]
And: [SOLICITOR / CONVEYANCER NAME]
Re: Gifted deposit for the purchase of [PROPERTY ADDRESS]
I, [GIVER'S FULL NAME], of [GIVER'S FULL ADDRESS], confirm that I am gifting
the sum of £[AMOUNT IN FIGURES] ([AMOUNT IN WORDS] pounds) to
[RECIPIENT FULL NAME(S)] as a contribution toward the purchase of the property
at [PROPERTY ADDRESS].
I confirm that:
1. The sum is a gift and is not a loan.
2. I do not expect, and will not require, repayment of any part of the gift,
whether now or in the future, whether in full or in part.
3. I have no legal interest in the property and will not claim any legal,
equitable or beneficial interest in the property at any time.
4. I am giving this gift from my own resources. I am solvent and not aware of
any reason why my circumstances would prevent me from making this gift.
5. I confirm I am happy for [LENDER NAME] and [SOLICITOR NAME] to verify the
source of these funds via my bank statements and identification documents
as required.
My relationship to the recipient(s) is: [RELATIONSHIP - e.g. parent, grandparent].
Signed: ____________________________
Print name: [GIVER'S FULL NAME]
Date: [DATE]If the gift comes from joint givers (e.g. both parents), each one signs their own version of the letter, or both sign a single combined letter. Check the lender’s preference—some accept either, others only one.
Source-of-funds documentation
A gifted-deposit letter alone is rarely enough. The conveyancer also needs to verify where the giver’s money came from. The standard pack:
- The giver’s photo ID—passport or driving licence—and proof of address.
- The giver’s bank statements—usually 3–6 months—showing the funds in their account before transfer.
- An audit trail for any large recent deposits into the giver’s account—a sale of investments, an inheritance, a downsize of their own home.
Where the giver does not have an obvious paper trail—for example, money built up over decades in cash—the conveyancer will likely ask for a written explanation. The conveyancer’s AML rules are stricter than the lender’s; a “yes” from the lender can stall at the solicitor’s desk for weeks while documentation is collected.
Inheritance tax implications
A gift carries no income tax for either party. But if the giver dies within seven years and their estate is above the IHT threshold, the gift becomes a potentially exempt transfer (PET) and is added back into the estate.
The taper relief that applies after the giver’s death:
| Years between gift and death | Effective IHT rate on gift |
|---|---|
| 0–3 | 40% |
| 3–4 | 32% |
| 4–5 | 24% |
| 5–6 | 16% |
| 6–7 | 8% |
| 7+ | 0% |
For most parents and grandparents in their 50s and 60s, the seven-year clock is comfortable. For older relatives, it is worth thinking about—though the IHT is paid by the estate, not the recipient, which softens the conversation.
The annual gift allowance of £3,000 per giver, plus the “small gift” allowance of £250 per recipient, can be used to chip away at IHT exposure for ongoing gifting. A one-off £30,000 gift will use these allowances and treat the rest as a PET.
Common reasons gifted-deposit letters get rejected
Lenders push back when:
- The letter is missing required statements—especially the “no legal interest” wording.
- Signatures do not match other documentation.
- The giver does not have the funds in their own account at the date of the letter.
- The funds in the giver’s account come from a recent transfer that itself is not documented.
- There is any suggestion of a loan disguised as a gift.
The fix is almost always: rewrite the letter using the lender’s own template, and provide the supporting documentation in one batch rather than dribbled across emails.
When the giver is also a borrower
Sometimes the parent isn’t gifting—they are co-buying or guaranteeing. In those cases:
- A joint borrower sole proprietor (JBSP) mortgage lets the parent’s income support the loan without putting their name on the title.
- A family offset mortgage uses parents’ savings to reduce the interest paid on your loan.
- A guarantor mortgage has the parent agreeing to step in if the borrower defaults.
These are different products from a gifted deposit and require their own documentation. Worth asking your broker about if your situation involves more than a one-off gift.
A practical checklist
Before the gifted-deposit funds land in your account:
- Confirm with your lender whether they accept gifts from your specific giver—most do for immediate family.
- Use the lender’s template if they provide one; otherwise, the template above.
- Have the giver sign and date the letter.
- Collect 3–6 months of the giver’s bank statements showing the funds in place.
- Have the giver’s ID and proof of address ready.
- Make sure the gift transfer reference clearly states “Gift for [property address]”.
Done in advance, the gifted-deposit conversation with the lender and conveyancer is a five-minute formality. Done late, it can delay completion by weeks—and lenders care less about your timetable than you do.
For the rest of the application process, see first-time buyer mortgage UK 2026 walkthrough.
Frequently asked questions
- What is a gifted deposit letter?
A signed document from a family member or close friend confirming the money toward your home is a gift, not a loan. UK lenders require it as part of mortgage underwriting whenever any portion of the deposit comes from a third party.
- Who can gift a deposit?
Most UK lenders accept gifts from immediate family—parents, grandparents, siblings, spouses, civil partners. Some accept gifts from extended family or close friends, but each lender has its own policy and the wider the relationship the more documentation they tend to ask for.
- Do I pay tax on a gifted deposit?
No income tax for either party. Inheritance tax may apply if the giver dies within seven years and their estate is over the IHT threshold—the gift becomes a "potentially exempt transfer" with tapered relief. Otherwise, the recipient owes nothing.
