Give the gift of a deposit this Christmas!

What is a gifted deposit?

A gifted deposit is a sum of money that is given by somebody, usually a family member, which forms all or part of a deposit for someone buying a property.

What do you need to know?

  • It is important to remember that if you gift a deposit, it is just that, a gift. This means you will be required to sign a written declaration that states it is a gift and that the home buyer is not required to pay it back.
  • If you plan to give a gifted deposit you should seek independent advice to ensure you understand you will not have an interest in the property or the right to get your money back.
  • Most lenders will accept gifted deposits from close family members and a few will even accept gifted deposits from more distant relatives and friends.
  • The lender or solicitor may request to see a bank statement or other documentation to evidence where the gifted deposit has originated from.
  • A gifted deposit can be used alongside the applicant’s own savings or the Help to Buy scheme.

What are the alternatives to gifting a deposit?

There are many other ways parents can support their children when purchasing their first home and different ways borrowers can maximise their savings for their deposit.

  • Low-deposit mortgages – the availability of products that offer a 95% or 90% LTV has substantially increased. This means that mortgages are now more accessible for buyers with smaller deposits.
  • Guarantor mortgages – parents can be named on the mortgage to enhance the affordability for the first time buyer. They can also offset their savings or even take out a joint mortgage with their children.
  • Government schemes – if the buyer can’t be helped by their family, government schemes such as Help to Buy or Shared Ownership could be good options.
  • Help to Buy ISA – as well as the government schemes listed above, a Help to Buy ISA could assist the buyer in saving a larger deposit. The Help to Buy ISA provides a 25% bonus to first time buyers on a limited amount of savings when it is being used to purchase a house.

If you would like more information about giving a gifted deposit or other options for first time buyers then speak to one of our advisers today.