Gifted deposit (Bank of Mum and Dad)
A gifted deposit is money given to you, usually by close family, to use as your mortgage deposit. Most lenders accept it with a simple gifted deposit letter confirming it is a genuine gift, not a loan, and that the giver will not own a share of the home. The funds must be traceable for anti-money-laundering checks. A gift, unlike a family loan, does not reduce how much you can borrow.
Why lenders ask for a letter
Lenders need to know the deposit is genuinely yours and that nobody else has a hidden claim on the property. A gifted deposit letter settles both points: it confirms the money is a gift with no repayment expected, and that the giver will not own a share or have rights over the home. Without that confirmation, a lender cannot be sure the deposit is not really a loan or a stake.
What the letter usually includes
- The name of the person giving the gift and their relationship to you.
- The amount, and that it is a gift, not a loan.
- Confirmation the giver will not own a share of, or have rights over, the property.
- That no repayment is expected.
Gift versus loan, and tax
A genuine gift does not count against your affordability, while a family loan usually must be declared and can reduce your borrowing. Large gifts can also have inheritance tax implications for the giver in some circumstances, so it is worth the giver taking tax advice. The mortgage side is straightforward once the letter and paper trail are in place.
Common questions
Who can give a gifted deposit?
Most lenders accept gifts from close family such as parents, grandparents or siblings. Some are more flexible than others about wider family or friends. The giver usually needs to confirm in writing that it is a genuine gift with no expectation of repayment and no stake in the property.
What is a gifted deposit letter?
It is a short letter from the person giving the money, confirming the amount, that it is a gift not a loan, that they will not own a share of the property, and that they have no right to the money back. Lenders ask for it to be satisfied the deposit is genuinely yours.
Does the money need to be traceable?
Yes. Lenders and conveyancers carry out anti-money-laundering checks, so they will want to see where the gift came from, for example bank statements showing the funds. Move the money in good time and keep a clear paper trail.
Is a gift different from a loan?
Very. A true gift does not have to be repaid and does not count against your affordability. A loan from family usually must be disclosed and can reduce how much you can borrow, because it is a commitment. Lenders treat the two completely differently.
If family want to boost your borrowing rather than your deposit, see JBSP and guarantor mortgages.
Founder, MortgageExplained, MortgageExplained
Adam spent nearly a decade as a mortgage adviser at Just Mortgages, with further experience in commercial finance. He is CeMAP and CF qualified. He built MortgageExplained to do one thing well: explain mortgages in plain English, then introduce you to a regulated broker when you are ready. Every page is written and reviewed by Adam.
Last reviewed: 29 June 2026