Property Guide -- Updated July 2026
Gifted Deposit Mortgage Guide 2026/27
A growing share of UK first-time buyers rely on a gifted deposit from parents or family to get onto the property ladder. This guide explains the gifted deposit letter lenders require, the seven-year Inheritance Tax rule that can apply to the giver, and how a gift differs from a family loan.
What a Gifted Deposit Is
A gifted deposit is money given, rather than lent, by a family member -- most commonly a parent, but sometimes a grandparent or sibling -- to help a buyer fund all or part of the deposit needed to secure a mortgage. For it to count as a genuine gift in the eyes of a mortgage lender, the giver must have no expectation of repayment and no ongoing stake or interest in the property being purchased, which is why lenders require it to be formally documented rather than simply taken on trust.
The Gifted Deposit Letter
Almost every UK mortgage lender requires a signed gifted deposit letter before releasing funds whenever any part of the deposit comes from a gift. The letter typically confirms the amount being gifted, states clearly that it is non-repayable, confirms the giver has no interest or stake in the property, and confirms the giver is not aware of anything likely to affect the buyer's ability to keep up mortgage repayments. Your conveyancing solicitor or mortgage broker can usually provide the specific template your lender requires, since exact wording requirements vary between lenders.
The Inheritance Tax Seven-Year Rule
A cash gift from an individual is treated for Inheritance Tax purposes as a "potentially exempt transfer" -- broadly, it falls outside the giver's estate for Inheritance Tax purposes only if they survive at least seven years after making the gift. If the giver dies within that seven-year window, the gift may still be counted towards their estate, with the amount of tax potentially due tapering down the longer they survived after the gift date, subject to available exemptions such as the annual gift allowance. This is worth understanding on both sides of a gifted deposit, and larger gifts in particular may warrant a conversation about estate planning -- check current gov.uk Inheritance Tax guidance for the specific thresholds and exemptions that apply.
Gift vs Family Loan
A gifted deposit is non-repayable and gives the person providing it no ongoing stake in the property, whereas a family loan is expected to be repaid, sometimes with interest, and may occasionally be secured against the property through a legal charge. Lenders treat the two very differently in an affordability and risk assessment -- a loan effectively reduces the buyer's genuine equity in the property and typically needs to be disclosed to the lender and factored into affordability calculations, so it is important to be accurate about which arrangement genuinely applies rather than informally treating a loan as a gift.
Solicitor and Anti-Money-Laundering Checks
Your conveyancing solicitor will normally prepare or review the gifted deposit letter and carry out anti-money-laundering checks on the source of the gifted funds, which often means requesting bank statements or other evidence from the giver showing where the money came from and how long it has been held. Building in enough time for these checks -- and having the giver ready to provide the paperwork promptly -- can help avoid delays close to completion, since gifted deposit documentation is a routine but sometimes time-sensitive part of the conveyancing process.