Gifted Deposits.

If you’re a first-time buyer or you’re looking to boost your deposit on a property, a gifted deposit could help. They are financial donations made to you by family or close relatives, such as uncles and aunts, and, unlike a loan, they don’t need to be repaid.

The Blueprint Financial Solutions team of advisers is highly experienced at handling gifted deposits. We’ll help clients in Gloucestershire and across the UK to get on the property ladder or buy their next home by ensuring all legal and lender requirements are met before finding the most suitable mortgage for you that makes the most of your gifted deposit. 

What is a Gifted Deposit?

If you’re a first-time buyer needing support to get onto the property ladder, a gifted deposit could help. This is when your family member or close relative, such as your parents, gifts money to you to help you buy a property, with no expectation of the money being repaid to them. 

If you use a gifted deposit, there are no legal requirements. However, the person who gives you the money must write a gifted deposit letter. The letter is sent to your lender, and it tells them that the money is a gift, not a loan, and that you do not need to pay the money back. It also confirms that they have no claim to your property.

Lenders will check that your gifted deposit comes from a trusted person, and your donor may be asked to prove their financial status. They might need to provide their bank statements to show where the money has come from.

Saving a large deposit can be challenging. Using a gifted deposit can make it easier for you to save a bigger down payment, meaning you’re more likely to be accepted for a mortgage and possibly secure better terms. 
Ways to gift a deposit

Your family members or close relatives can help you buy a property with a gifted deposit in a few ways. However your donor chooses to gift a deposit to you, the correct process must be followed to ensure all legal and lender requirements are fully met.

Directly transferring funds from your donor to your solicitor or conveyancer is one of the easiest ways to gift a deposit. This method is clear and straightforward because the money will arrive in the chosen account quickly, sometimes instantly. This means the deposit will be ready for your property purchase as soon as possible, helping to potentially reduce delays.

Your lender will need a formal gifted deposit letter from your donor. The letter must clearly state that the money is a gift, not a loan, and that your donor has no rights to your property. 

Inheritance, the sale of assets, or other sources can all be used to gift a deposit. Your lender will ask you to prove where your funds have come from so they can make sure anti-money laundering laws are being followed.

If you’re a first-time buyer or you cannot save a large deposit without extra financial support, a gifted deposit could be a helpful way for you to buy a property. But it’s important to follow your lender’s requirements and quickly provide any documents they need. This will ensure the process runs smoothly and doesn’t delay the property purchase process.

Who Can Gift a Deposit?

Your family members or close relatives will usually be gifted deposit donors. Parents, grandparents, siblings or extended family, including aunts and uncles, are very common donors. However, depending on your lender’s policies and requirements, you might be allowed to have a close friend gift you money. 

Whoever will be the person gifting a deposit must be financially stable. It’s important for them to make sure that their own finances are in order and won’t be negatively impacted by their gifted donation to you. Your donor should only give you funds if they can afford to give them to you without needing them to be repaid. You must remember that lenders will need confirmation that the money is a gift, not a loan.  

Your gifted deposit must be clearly declared and documented during your mortgage application process. The lender will ask for a gifted deposit letter confirming your donor’s name and their relationship to you. The letter must also state that the money is a gift to you that will not need paying back with any interest, and that the guarantor has no rights to your property.

It’s important to be open and honest with your lender when you’re receiving a gifted deposit. They will ask you to show proof of where the money came from, such as a bank statement, to make sure it’s from a proper source. Lenders use this proof as a way to prevent money laundering and to meet all legal requirements.

What Happens If You Have a Gifted Deposit?

It’s usually easy to use a gifted deposit to help you buy a property. However, there are a few things to remember and fully understand about using this method of raising a mortgage deposit.  

The person gifting a deposit must be aware of potential inheritance tax implications. If your donor passes away within seven years of gifting a deposit to you, that money could be taken into account when their estate is assessed for inheritance tax purposes. The amount of inheritance tax that would need to be paid is calculated using the size of the donor’s estate and how long it’s been since the money was gifted to you. 

You won’t have to pay income tax or capital gains tax on a gifted deposit because you’re the person receiving the gifted funds. Because the deposit is considered a gift, the donated money won’t be taxed as part of your earnings.  

You and your donor need to fully understand any potential tax implications of using a gifted deposit. The money must be gifted in a way that meets all legal requirements, so it’s a good idea to get proper legal and tax advice from a qualified professional. Your mortgage broker will not be able to provide advice on this area.       

How Can Blueprint Financial Solutions Help?

Blueprint Financial Solutions helps make understanding gifted deposits simple and stress-free. Our experienced team of advisers provides personalised advice services that can guide you through the process of using a financial donor and meeting all the necessary requirements.  

From understanding who can gift a deposit to how to declare and document donated funds to a lender, we make sure you are compliant with your lender’s rules. Your mortgage application will stay on track with as few delays as possible.

Our advisers specialise in finding personalised mortgage options that incorporate your gifted deposit into the process. We take the time to understand your financial situation before finding a suitable mortgage deal for you, making sure your donated funds meet all lender requirements.  

Our experienced team will get all your paperwork ready, including your donor’s gifted deposit letter and any forms your lender needs to be completed. We take care to check that everything is correctly documented, which means you and your lender will have confidence and peace of mind during your application. 

We will help you apply for a mortgage that makes the most of your gifted deposit and helps you achieve your homeownership goals.   

Contact Blueprint Financial Solutions today and speak to our advisers about using a gifted deposit. We’ll help you understand what it is and how to use it.

Fill in our contact form or email info@blueprintfs.co.uk.

If you’d prefer to speak to us, call us on 0800 644 6402.

Book your consultation today and talk to us about using a gifted deposit to achieve your property ownership goals!