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The bank of mum and dad: thinking of buying with a gifted deposit?


One of the biggest hurdles when buying a first home is saving enough for the deposit.

Even if you manage to secure a low deposit mortgage of 5%, you still need to save that initial 5% which can be no mean feat, so it’s no surprise that more and more people are turning to parents or other family members to help them get on to the property ladder. 

What is a gifted deposit?

A gifted deposit is money given to you to cover some or all of your deposit. The money must be given freely, with no requirement or expectation of repayment at any time in the future. According to research by Legal & General in October 2020, 49% of first-time buyers aged under 35 get help from the bank of mum and dad to buy a property.

Interestingly, second steppers looking to move to a larger home also often look to relatives for financial assistance.

What do I need to do to buy with a gifted deposit?

If you are in the position of having relatives who want to help you buy a home by contributing to your deposit, a gifted deposit letter is usually required to prove where the money has come from and that it’s a gift with no strings attached.

What about the remaining mortgage?

Whilst getting financial support towards your deposit puts you in a fortunate position when buying, you still need to find an affordable, suitable mortgage to cover the rest of your borrowing. Moreover, different lender rules sometimes apply with gifted deposits, which is why it’s vital you talk through your different mortgage options with a professional mortgage adviser. 

That’s where The Property Centre’s Mortgage and Protection Advisers can help. Unlike banks and building societies who can only offer their own mortgage products, The Property Centre’s in-branch mortgage advisers have access to over 12,000 different mortgages from over 90 UK lenders, know the rules applied by lenders and can assess your incomings and outgoings to find you the best mortgage deal, suited to your circumstances. Better still, you don’t need to be buying or selling through The Property Centre to arrange your mortgage and an appointment can be easily arranged.  

Take a step closer to homeownership this December and book an appointment with your local Stroud mortgage adviser today.

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