Gifted Deposit FAQs

What is a Gifted Deposit?

A gifted deposit is money that can help a homebuyer towards buying a property by providing a financial boost towards a deposit. The amount gifted can equate to some or all of the deposit they need and is a financial transaction that doesn’t need to be repaid back to the contributor.

How can gifted deposits help?

A gifted deposit can provide financial support if you are able to pay the monthly repayments but are finding it difficult to save up for the initial deposit. This is normally the case for individuals with a low income. With a gifted deposit, it’s very likely that you will have access to more favourable rates from a mortgage lender.

Who can gift the deposit?

In the majority of cases, birth or adopted parents will gift you the deposit. This option is known as the ‘Bank of Mum & Dad”. Despite this, other family members could contribute too. It does come down to the lender, therefore, it is best that you speak to a Mortgage Advisor in Doncaster, if that is the case.

Do your parents know you need help?

Through our experience providing Mortgage Advice in Doncaster, we do find that customers are unaware that their parents can financially support them with getting a mortgage. In some cases, customers don’t feel they can ask their parents for help. It’s very likely that parents will help you as it’s a significant event in their lives and will want to contribute through a gifted deposit.

Overall, taking out a mortgage can save you more money each month compared to renting. Depending on your situation, you could be paying a lot less per month.

In many cases, the deposit that is gifted usually is from an inheritance, however, you may find that your parents will gift it a lot earlier as long as they have enough money saved or have released equity from their own home.

Gifted Deposit VS Loans

Many mortgage lenders sometimes won’t agree to accept a loan as a way of paying off your deposit. Normally, the lender will not be so sure if you are able to afford paying both at the same time.

Is there a maximum or minimum gifted amount?

Even though this isn’t an exact limit to the amount that can be gifted to a home buyer, it’s best to keep in mind that some lenders will want you to have at least 5% from your own savings.

The rule of thumb is the more you can be able to put down, through combining savings and gifted deposit, the more favourable deals you have access to.

Who can benefit from a gifted deposit?

Gifted deposits are a huge benefit and are popular amongst First Time Buyers in Doncaster and Home Movers.

Furthermore, a gifted deposit will cover the initial 5% deposit for the Help to Buy Equity Loan Scheme. This does depend on the mortgage lender though.  

What proof is required?

 If you do receive a gifted deposit, the donor will need to sign a form declaring that it is not a loan and is a gift. Other bits of proof like ID, address and bank statements may be needed.

Our Mortgage Advice Service in Doncaster

Last Edited: 11/10/2022