Using Family Gifts or Equity as a Deposit: What You Should Know
Many buyers assume using family help for a deposit is complicated or frowned upon by lenders. In reality, most UK lenders are perfectly comfortable with gifted deposits and gifted equity — provided everything is structured and documented correctly.
The confusion usually comes from mixing these up with guarantor mortgages, which lenders are far more cautious about. Gifts and equity are different, and generally much simpler.
This guide explains how they work, what lenders need, and how to avoid delays.
What Is a Gifted Deposit?
A gifted deposit is money given to you by a family member (usually parents or grandparents) to help fund your purchase.
Key points lenders care about:
The money is not repayable
The gift giver will not own part of the property
There is no charge or loan secured against the home
If the money is repayable, lenders must factor it into affordability before the mortgage is approved. Once the mortgage completes, lenders do not monitor or track informal arrangements, and the gift does not appear on your credit report.
Why Lenders Are Usually Fine With Gifts
Lenders mainly want to know one thing:
Is this money legitimate and does it create future risk?
If the answer is no, gifts are widely accepted.
What they are not keen on:
Undisclosed loans dressed up as gifts
Complex guarantor-style arrangements
Third parties expecting control or repayment
As long as the structure is clear, gifts rarely cause issues.
What Is Gifted Equity?
Gifted equity is different from a cash gift.
It usually applies when:
You are buying a property from a family member
The property is sold to you below market value
The discount acts as your deposit
Example:
If a property is worth £300,000 but sold to you for £270,000, the £30,000 difference is treated as gifted equity.
This can be very effective, but only works when:
You know the seller
The value is independently confirmed
The seller signs documents confirming the discount is a gift
You cannot usually use gifted equity on open-market purchases.
What Paperwork Do Lenders Require?
This is where most delays happen.
Expect lenders to request:
Proof of ID from the gift giver
Bank statements showing the source of funds
A signed gifted deposit or gifted equity declaration
Confirmation that the gift is non-repayable
Evidence of the funds being transferred (for cash gifts)
This is normal. It is not about mistrust — it’s regulatory compliance.
Common Problems That Cause Delays
Gift-related applications fail or stall due to:
Missing or incorrect gift letters
Funds moving through multiple accounts without explanation
Late disclosure of gifts
Confusion between gifts and loans
Equity gifts not aligned with the purchase structure
Most of these are avoidable with the right preparation.
Step-by-Step: How the Process Should Work
Confirm whether a cash gift or gifted equity fits your situation
Agree the structure clearly with your family member
Gather ID and bank statements early
Prepare the correct gift or equity declarations
Submit everything with the full mortgage application
Handled correctly, gifts rarely slow things down.
Does Gifting Affect the Giver?
Lenders do not assess the gift giver’s affordability in the same way as a borrower.
However, they do need to:
Verify the funds came from a legitimate source
Confirm the gift does not put the giver under financial strain
This is a standard check and not a judgment on personal finances.
How We Help
We confirm whether your gift or equity structure is acceptable before applying
We prepare documentation correctly the first time
We prevent delays caused by missing or unclear paperwork
We don’t promise acceptance of specific gift types. We focus on getting it structured properly so the application stands the best chance of success.
Key Takeaway
Family help is far more common — and accepted — than most buyers realise.
Gifted deposits and gifted equity are usually straightforward when documented properly. The problems arise from confusion, not lender resistance.
Get the structure right early, and family support can be one of the simplest ways to secure your mortgage.
