Do not describe repayable money as a gift. An undisclosed loan or beneficial interest can affect affordability, the lender's security and the legal work. Get legal and tax advice for family agreements. Your home may be repossessed if you do not keep up repayments.
Gift, loan or ownership contribution?
| Arrangement | What must be clear |
|---|---|
| Outright gift | No repayment and normally no legal or beneficial interest in the property |
| Family loan | Repayment terms, monthly commitment and whether the lender accepts borrowed deposit funds |
| Ownership interest | Legal structure, priority, tax and whether it is compatible with the mortgage |
What the lender may ask for
Requirements differ by lender, donor relationship, country and source of wealth. Do not use a generic letter until the broker or lender confirms its format. Common information includes:
- the donor's name, address and relationship to each buyer;
- the amount and confirmation that it is not repayable;
- whether the donor will live at the property or retain any interest;
- identity and address evidence;
- bank statements and evidence explaining how the donor acquired the funds; and
- permission for checks or direct contact where required.
Source of funds and source of wealth
The conveyancer has its own anti-money-laundering duties and does not simply rely on mortgage approval. A bank balance shows where money is held; it may not explain how it was accumulated. Savings, property sale proceeds, inheritance or investment disposal can require different evidence.
Keep the transfer trail intact and answer requests honestly. There is no universal rule that a gift must sit in the buyer's account for 30 or 90 days. Transferring it early does not remove the need to evidence the original source.
Overseas gifts
An overseas donor or account can require translated or certified documents, currency-transfer records and additional checks. Lender and conveyancer country policies differ. Confirm acceptability before transferring the money or paying non-refundable purchase costs, and allow time for verification.
Inheritance Tax is donor-specific
HMRC says some lifetime gifts can affect Inheritance Tax if the donor dies within seven years. Exemptions, earlier gifts, the estate and who received the gift all affect the calculation. Taper relief does not automatically make every gift tax-free after three years. The donor should keep a record of the date, recipient and value and take tax advice where the amount or estate is material.
Application checklist
- 1. Explain the arrangement. Tell the broker whether it is a gift, loan or ownership contribution.
- 2. Check donor acceptance. Lenders can differ on family, non-family and overseas donors.
- 3. Use the requested declaration. Get the current lender template rather than guessing the wording.
- 4. Build the audit trail. Keep statements, sale or inheritance evidence and transfer records.
- 5. Tell the conveyancer immediately. Their checks are separate and may require more evidence.
- 6. Get advice on side agreements. Do not create a private repayment promise that conflicts with the mortgage declaration.
Preparing a gifted-deposit application?
We can try to match the enquiry with an FCA-authorised broker whose stated service area includes gifted deposits.
Start a broker match