Calculate Gifted Deposit Impact
Enter your property details and gifted deposit amount to see how family gifts affect your mortgage affordability, payments, and potential savings.
Calculate Your Mortgage with Family Gifts
Calculate your UK mortgage when receiving gifted deposits from family with our professional gifted deposit calculator. Our calculator shows you exactly how family gifts affect your affordability, LTV ratios, stamp duty savings, and mortgage options. Updated for October 2025 UK market conditions. Whether you're receiving a partial gift, full deposit gift, or exploring first-time buyer benefits, get instant calculations that help you understand gifted deposit advantages. Use alongside our affordability calculator to see borrowing capacity and our first-time buyer calculator to explore additional schemes and benefits available with gifted deposits.
Enter your property details and gifted deposit amount to see how family gifts affect your mortgage affordability, payments, and potential savings.
Understanding how gifted deposits work is crucial for maximizing family support while meeting lender requirements. This comprehensive guide explains everything you need to know about receiving and using gifted deposits for your UK mortgage.
A gifted deposit is money given to you by a family member (usually parents or grandparents) to help with your mortgage deposit. The key requirement is that it must be a genuine gift with no expectation of repayment. The donor cannot have any claim on the property or expect the money back.
Property Value: £300,000
Your Savings: £15,000 (5%)
Gifted Deposit: £30,000 from parents
Total Deposit: £45,000 (15%)
Result: LTV drops from 95% to 85%, unlocking rates 0.5-0.8% lower, saving £100-£150/month and £30,000-£45,000 over 25 years!
All UK lenders require a formal gifted deposit letter from the donor. This legal document confirms the gift is genuine and protects both you and the lender. Here's what must be included:
Important: Some lenders provide their own gifted deposit letter template. Always check with your lender or mortgage broker for their specific requirements before having the letter signed.
Understanding the tax implications of gifted deposits is crucial for both donors and recipients. Here's what you need to know about inheritance tax, annual allowances, and exemptions:
Good news: You don't pay any tax on receiving a gifted deposit. It's completely tax-free for you, regardless of the amount. The gift doesn't count as income or capital gains.
Inheritance Tax (IHT): Gifts may be subject to IHT if the donor dies within 7 years and the gift exceeds the £325,000 nil-rate band. Annual £3,000 allowance applies.
Gifted deposits offer significant advantages beyond just increasing your deposit amount
Increasing your deposit from 5% to 15% with a £30,000 gift can reduce your interest rate by 0.5-0.8%, saving £100-£150/month and £30,000-£45,000 over 25 years.
A 15-20% deposit (vs 5%) gives you access to 80-90% of available mortgage products instead of just 30-40%, providing more choice and better terms.
Instead of saving for 5-7 years to build a 15% deposit, a gifted deposit lets you buy now, avoiding rent payments and potential property price increases.
First-time buyers pay £0 stamp duty on properties up to £425,000. A gifted deposit helps you buy sooner to claim this benefit (save up to £6,250).
A larger deposit makes your application more attractive to lenders, especially if you have a slightly lower credit score or irregular income (self-employed, contract).
A larger deposit means a smaller loan amount, reducing your monthly payments and improving your debt-to-income ratio, making life more affordable.
Common questions about gifted deposits and family mortgage gifts
Yes, UK lenders generally accept gifted deposits from immediate family members (parents, grandparents, siblings). The gift must be genuine with no expectation of repayment, and you'll need a signed gift letter confirming this. Some lenders may require proof of the donor's funds and identity.
Recipients don't pay tax on gifted deposits, but donors may face inheritance tax implications if they die within 7 years of making the gift (if it exceeds the annual £3,000 allowance). Gifts between spouses/civil partners are generally exempt. Consider seeking tax advice for large gifts.
Gifted deposits can improve your application by increasing your deposit size, reducing LTV ratio, and potentially securing better interest rates. However, lenders will scrutinise the gift's legitimacy and may require additional documentation. Your affordability assessment remains based on your own income.
A gifted deposit letter must include: donor's full name and address, relationship to you, exact gift amount, confirmation it's a gift (not a loan) with no repayment expectation, statement that donor has no claim on the property, property address, and donor's signature and date. Some lenders provide their own template, so always check requirements first.
Yes, but buy-to-let lenders are more restrictive. Most require a minimum 25% deposit, so the gifted amount must be substantial. Some lenders don't accept gifted deposits for BTL at all, whilst others may accept them only from immediate family. BTL mortgages also require proof that you can afford the mortgage from rental income alone, regardless of the gifted deposit.
There's no legal limit on how much parents can gift for a deposit. However, consider inheritance tax implications: gifts over £3,000/year may be subject to IHT if the donor dies within 7 years (if their total estate exceeds £325,000). Many parents gift £20,000-£50,000 for deposits, with some gifting the entire deposit amount. Lenders will require proof of where the donor obtained the funds (anti-money laundering checks).
Most UK lenders accept gifted deposits from immediate family (parents, grandparents, siblings), but policies vary. Some lenders accept gifts from wider family (aunts, uncles) or even friends, whilst others are more restrictive. A few specialist lenders don't accept gifted deposits at all. The percentage of your deposit that can be gifted also varies - some lenders accept 100% gifted deposits, whilst others require you to contribute at least 5-10% from your own savings.
Yes, you can combine a gifted deposit with a Lifetime ISA (LISA) bonus. For example: £15,000 your savings + £5,000 LISA bonus + £25,000 gifted deposit = £45,000 total deposit (15% on a £300,000 property). This combination is powerful because you get both the 25% government bonus on your LISA and family support. Lenders will require documentation for each source: LISA statements and a gifted deposit letter.
Lenders typically require: (1) Signed gifted deposit letter from donor, (2) Donor's bank statements (usually 3-6 months) showing they have the funds, (3) Proof of transfer from donor to you (bank transfer confirmation), (4) Donor's ID (passport or driving licence), (5) Proof of donor's address (utility bill, council tax statement), (6) Evidence of your relationship to the donor (birth certificate if parent). These anti-money laundering checks ensure the gift is legitimate.
Yes, grandparents are widely accepted as gifted deposit donors by most UK lenders. In fact, grandparents are the second most common source of gifted deposits after parents. The same requirements apply: gifted deposit letter, proof of funds, no repayment expectation, and no claim on the property. Grandparents often use pension lump sums, savings, or equity release to fund deposits for grandchildren.
If the donor wants the money back, it was never a true gift - it was a loan. This is mortgage fraud and can have serious consequences: the lender can demand immediate repayment of the entire mortgage, you could face criminal charges, and your credit score will be severely damaged. The gifted deposit letter is a legal declaration that the money is a gift with no repayment expectation. If there's any possibility the donor might want the money back, consider a family loan instead (which must be declared to the lender and affects your affordability).
A gifted deposit doesn't affect your first-time buyer stamp duty relief eligibility. You still pay £0 stamp duty on properties up to £425,000 (saving up to £6,250). The gift simply helps you buy sooner to claim this benefit. For example, if you have £15,000 saved and receive a £30,000 gift, you can buy a £300,000 property with a £45,000 deposit (15%) and pay £0 stamp duty as a first-time buyer. Without the gift, you might need to save for another 3-5 years, potentially missing the stamp duty relief window.
This calculator provides educational estimates only and does not constitute financial advice. Gifted deposits must be genuine gifts with no repayment obligation. Lenders require a gifted deposit letter from the donor confirming the gift is non-repayable. Gifts from immediate family (parents, grandparents) are most readily accepted. Consider inheritance tax implications for gifts over £3,000 annually. All calculations use typical UK lending criteria current as of October 2025. MortgagePro.uk is not regulated by the Financial Conduct Authority. For personalized gifted deposit advice, consult an FCA-authorized mortgage broker. Your home may be repossessed if you do not keep up repayments on your mortgage.