
January 31, 2025
Gifted deposits are becoming increasingly common as a way for family members to assist buyers in purchasing a home. Buying a home is one of the biggest purchases most people make and a gifted deposit can help purchasers secure the necessary funds to get onto the property ladder amid the current housing and cost of living crisis.
A gifted deposit is an amount of money given to someone who is purchasing a property and may be struggling to save the required funds needed for their deposit.
These are typically provided by a family member and are often given to first time buyers.
The money is a gift rather than a loan, so this means that it does not need to be repaid and is not secured over the property by way of a standard security charge. The giftor will not have any legal claim or ownership rights to the property.
With the increase in cost of living and rental prices, as well as the rising property prices in the central belt, it can be a challenge for buyers to gather the funds required to purchase a home.
A gifted deposit provides buyers with the financial assistance required to secure their dream home and access the housing market.
Usually family members, including parents, grandparents and siblings, will provide a gifted deposit to buyers.
It is important to check with your mortgage advisor if you are planning on obtaining a gifted deposit from someone who is not a close relative as some lenders may not accept this.
Your mortgage lender and your solicitor will require a gift letter signed by the giftor which will confirm that the funds are a gift and not a loan. It will include their relationship to you and the amount of the gift.
Your mortgage lender and solicitor will also require to see your giftor’s bank statement to evidence where the money originated and your giftor will also be required to complete ID checks under Law Society Anti Money Laundering Regulations.
The gifted deposit must be reported to the mortgage lender by both the mortgage advisor and the conveyancer. It is important to raise this with the lender early on to make sure that they will accept the gifted deposit.
If you are purchasing a property with a partner and one of you are getting a gifted deposit, it may be worth speaking to your solicitor about getting a Minute of Agreement in place. This is a legal agreement that can protect the funds in the event of a relationship breakdown or if you sell the property.
Something to consider is if there are any potential inheritance tax implications as a result of the gifted deposit.
It is worth speaking to a financial advisor regarding this if you have any concerns.
To discuss any of the points raised further, please contact a member of our Conveyancing team here.
Rowan Quinn Solicitor, Conveyancing | ||||
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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.