Guide · 4 minute read · Updated 10 Jul 2026

Gifted deposits: the rules, who can gift, and the gift letter

Most lenders happily accept a deposit gifted by close family, as long as it is a genuine gift with no strings and you can prove where the money came from. The paperwork is a short gift letter plus evidence of the funds; the friction is almost always in the money-laundering checks, not the gift itself.

Who can gift a deposit

Lenders draw the line at family, and most restrict it to close family: parents, grandparents and, depending on the lender, siblings and children. The tighter the relationship, the fewer questions. Gifts from aunts, uncles, cousins or friends are accepted by some lenders and refused by others, so if the giver is not a parent or grandparent, check the individual lender's policy before you rely on the money.

The gift also has to be exactly that, a gift. If the giver expects to be repaid, or to own a share of the property, most lenders will not accept it, because a loan is a debt that affects affordability and a stake gives someone else a legal interest in the home. A gift with conditions is not a gifted deposit in the eyes of a lender.

The gift letter

Nearly every lender asks the person giving the money to sign a short gift letter. It confirms a few specific things: who is giving the money and their relationship to you, the exact amount, that it is a genuine and non-repayable gift, that the giver retains no stake or interest in the property, and that they will have no rights over it. The giver usually signs and dates it, and some lenders ask for it to be witnessed.

Your solicitor or mortgage broker will normally provide a template, so you do not need to draft it from scratch. It is a simple document, but the mortgage cannot proceed without it, so sort it early rather than at the last minute.

Proving the money is clean

The slow part is anti-money-laundering, or AML, source-of-funds checks. The lender and your solicitor both have to be satisfied the money is legitimate, so the giver, not just you, may be asked to show where it came from: bank statements covering the gift, and evidence of the origin, such as savings built up over time, a property sale, a pension lump sum or an inheritance. A large sum that appears in an account with no history behind it is exactly what these checks are designed to flag.

Give it time. Gathering statements from an older relative, or explaining a sum that moved between several accounts, can take weeks, and completion cannot happen until everyone is satisfied. Factor the gift into your borrowing early using the mortgage affordability calculator, and start the paperwork as soon as the gift is agreed.

The inheritance-tax and care-fees angle for older gifters

For grandparents and parents giving from their own savings, there are two things to weigh. First, inheritance tax: a gift is normally free of inheritance tax if the giver survives seven years, but if they die within that window it can count back into their estate on a sliding scale. For most families this never bites, but on larger estates it is worth knowing.

Second, deprivation of assets. If an older person gives money away and later needs local-authority-funded care, the council can treat a gift made to avoid care fees as if the person still had it. A genuine gift to help a grandchild buy a home, made while the giver is in good health and can comfortably afford it, is very different from one made when care is already on the horizon, but it is a reason for older gifters to take their own advice before handing over a large sum.

Common questions

Who is allowed to gift me a mortgage deposit?

Most lenders accept gifts from close family, meaning parents and grandparents, and often siblings or children. Gifts from more distant relatives or friends are accepted by some lenders and refused by others, so check the specific lender's policy if the giver is not a parent or grandparent.

What is a gift letter for a deposit?

A short signed document from the person giving the money. It states who they are and their relationship to you, the exact amount, that it is a genuine non-repayable gift, and that the giver keeps no stake or rights in the property. Your solicitor or broker usually provides a template, and the mortgage cannot proceed without it.

Why does the lender want to see where the gift came from?

Anti-money-laundering rules require the lender and solicitor to confirm the money is legitimate. The giver may need to show bank statements and evidence of the source, such as savings, a property sale or an inheritance. A large sum with no history behind it is what these checks are designed to flag, so allow extra time.

Are there tax issues for the person gifting the deposit?

Possibly, on larger estates. A gift is usually free of inheritance tax if the giver lives another seven years, but can count back into their estate if they die within that period. Older gifters should also consider deprivation of assets rules, which let a council disregard a gift made to avoid future care fees.

Guidance and education, not regulated financial advice.