In theory, anyone can gift you a deposit. In reality, however, most mortgage lenders prefer if the person giving you the money is a relative, such as a parent, sibling, or grandparent. Some lenders have even stricter requirements, stating it must be a parent that gives you the money.
What is a family gifted deposit mortgage?
A gifted deposit is when somebody – usually a family member – gives a homebuyer a sum of money towards their deposit, or gifts them the entire deposit. The crucial thing is that it’s a gift, with no agreement for the homebuyer to repay the money.
Can a family member gift you a deposit for a mortgage?
Instead of a family member gifting you a deposit for a mortgage, you could nominate a parent (or grandparent) as your mortgage guarantor who can ‘guarantee’ your mortgage should you fail to pay it. If you’re not lucky enough to get any help with your deposit and you’re still having to save hard, you could consider setting up a Lifetime ISA.
Do you need a gift letter for a mortgage?
If it is a gift, the mortgage lender will need a letter confirming this – see What to do when receiving a gifted deposit (you can get a get a template gift letter here ). If it is a loan then the mortgage lender needs to confirm they are happy for a 2nd charge to be registered against the property.
Can you get a mortgage with a gifted deposit?
Fortunately, first-time buyers can get a mortgage with a gifted deposit. That said, it’s important to take the correct steps in making sure your gifted deposit is acceptable by lenders. If you wish to use a gifted deposit for a mortgage, lenders and solicitors have a legal duty to ensure that your deposit gift is credible.
Do you need to know if it is a gift or a loan?
You may think it doesn’t matter because you are family, however if you are getting a mortgage then you’ll need to be clear on who owns the money. Your mortgage lender needs to know if the money is a gift or a loan.
