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Gifted deposit guide: Helping your child buy a house

Metta Stockman


If your child is trying to buy their first home, they might face difficulties due to the cost-of-living and rising mortgage rates. These challenges can make it tough for first-time buyers to save enough for a deposit or secure the loan they expected. This is where parental support, often referred to as the ‘bank of mum and dad,’ and the use of a gifted deposit, can be crucial.


What is a gifted deposit?

A gifted deposit is a sum of money given by a family member to help with the down payment on a home. This financial support can either cover the full deposit or a portion of it. This will improve access to better mortgage deals and make monthly repayments more manageable.



To provide a gifted deposit, you must adhere to certain requirements:

  1. Written declaration: You must declare in writing that the money is a gift, not a loan, and that you have no rights to the property. The declaration should include:
    • Name of the recipient
    • Amount of money gifted
    • Source of funds
    • Relationship to the recipient
    • Confirmation that it’s a gift with no repayment obligation
    • No claim to the property
    • Statement of sound mind
    • Signatures of the giver and an impartial witness
  2. Proof of identity: The mortgage lender will need proof of your identity, including photo ID, proof of address, and bank statements to comply with anti-money laundering regulations.


Who can give a gifted deposit?

Most lenders accept gifted deposits from parents, siblings, or grandparents. Gifts from friends or distant relatives are usually not permitted.


Amount of money for a gifted deposit

There is no limit to how much money can be gifted for a deposit. However, consider inheritance tax rules, as your child might be liable to pay up to 40% tax if you pass away within seven years of gifting the money and your estate exceeds £325,000.


Tax implications

Gifted deposits are tax-free if the giver survives for at least seven years after the gift. If the giver passes away within seven years and their estate is worth more than £325,000, the recipient may owe inheritance tax.


Declaration and documentation

The recipient must inform their mortgage lender and solicitor about the gifted deposit and provide the written declaration.


Protecting a gifted deposit in joint ownership

If your child is buying a home with a partner, you can protect your gift with a Deed of Trust. This legal document ensures the money remains with your child in case of a split.


Final thoughts

Supporting your child with a gifted deposit can make a significant difference in their ability to purchase a home. By understanding the rules and requirements, you can ensure the process is smooth and beneficial for both you and your child. For more information, contact a TSPC solicitor estate agent.