Gifted Deposits for First-Time Buyers: What Your Solicitor Needs to Know

Buying your first home can feel like stepping into a process everyone else understands except you. There are mortgages, deposits, surveys, searches, contracts and completion dates. Then, if a parent, grandparent or another family member is helping with your deposit, there is another phrase to understand: a gifted deposit.

For many first-time buyers, a gifted deposit is a huge help. It can make buying a home possible sooner than expected. However, it also means your solicitor and mortgage lender will need extra information before the purchase can move forward.

This is not unusual, and it does not mean anything is wrong. Gifted deposits are common. The important thing is to mention the gift early, provide the right documents and understand why the checks are needed.

What is a gifted deposit?

A gifted deposit is money given to you to help buy a property. It is often given by a parent, grandparent or close family member.

In most cases, the money is given as a genuine gift. This means it is not expected to be paid back. It also means the person giving the money will not own part of the property just because they helped with the deposit.

This distinction matters because if the money must be repaid, it may be treated as a loan rather than a gift. That can affect your mortgage application, because the lender may need to consider whether repayments could affect your ability to afford the mortgage.

Mortgage lenders have their own requirements around gifted deposits. Some lender instructions refer to gifts from family members, confirmation that the gift is not repayable and confirmation that the donor will not have an interest in the property. Requirements can vary, so your solicitor will check the position for your lender for you.

What does a conveyancer do when you buy a house?

If you are buying for the first time, you may not know what your conveyancer is actually doing. This is completely normal.

A conveyancer deals with the legal side of buying your home. Their job is to make sure the property can legally transfer to you and that your lender’s requirements are met.

This includes checking the draft contract, reviewing the legal title, carrying out searches, raising questions with the seller’s solicitor, reporting to you and your lender, preparing for exchange and completion, sending money safely and registering you as the owner after completion.

A lot of this work happens behind the scenes. You may not see every email, document or check. However, those checks are important. They help protect you from legal issues with the property and help make sure the lender is prepared to release the mortgage funds.

When there is a gifted deposit, your conveyancer also has to check where that money is coming from. This forms part of their legal and professional responsibilities.

Why does your solicitor need to know about the gifted deposit?

It can feel personal when your solicitor asks about money, especially if the money has come from family. First-time buyers sometimes worry that they have done something wrong. These checks are just a normal part of the conveyancing process.

Your solicitor needs to know about the gifted deposit for two main reasons.

First, your mortgage lender needs to understand how your purchase is being funded. The lender wants to know whether the deposit is your own money, a gift, a loan or a mixture of sources. If the money is a gift, the lender will usually want confirmation that it does not have to be repaid and that the donor will not own part of the property.

Second, solicitors must carry out anti-money laundering checks. The Solicitors Regulation Authority explains that, under the law, solicitors must confirm clients’ identities and check the source of funds involved in legal transactions. These checks are designed to help prevent money laundering and financial crime.

This means your solicitor may need to ask for evidence showing where the money came from. They are not asking out of curiosity. They are asking because they have to be satisfied that the funds can properly be used for the purchase.

What evidence is usually needed?

The exact documents needed can depend on your lender, the amount being gifted and where the money came from. However, there are some common documents your solicitor is likely to request.

Usually, the person giving the gift will need to provide a signed gifted deposit letter or declaration. This normally confirms the amount being gifted, their relationship to you, that the money is a gift and that it does not need to be repaid.

The donor may also need to confirm that they will not own part of the property and will not live at the property unless this has already been fully disclosed and approved.

Your solicitor may also need ID and proof of address for the person giving the gift. This is part of the identification and money laundering checks.

Bank statements are also commonly requested. These may be needed to show that the donor has the money available and to show where it has come from.

For example, if your parent is gifting £10,000 from savings, your solicitor may need to see bank statements showing the savings building up or being held in the account. If the money came from the sale of another property, they may need evidence of the sale proceeds. If it came from an inheritance, they may need documents linked to the estate.

It is best not to wait until the last minute to gather these documents. If your donor is away or uncomfortable sharing bank statements, this can slow the transaction down.

Can you use your own savings as well?

Yes, in many cases, buyers use a mixture of their own savings and a gifted deposit.

For example, your total deposit might be £15,000. You may have saved £5,000 yourself, with a parent gifting the remaining £10,000.

This is usually possible, but both parts of the deposit need to be explained. Your solicitor may need evidence of your own savings as well as evidence of the gift.

This is why it helps to keep clear records. Try not to move money between several accounts without keeping statements. If money has been transferred between accounts, your solicitor may need to follow the trail.

That can feel frustrating, but it is often easier to deal with early than just before exchange.

What if you are buying with another person?

Many first-time buyers purchase with a partner, spouse, friend or sibling. A gifted deposit can often still be used, but the details must be clear.

Your solicitor and lender will need to know who the gift is for. Is it being gifted to one buyer only, or to both buyers? Is the donor expecting the money to benefit their child only, or the couple jointly?

This can be particularly important where one buyer is contributing more than the other. For example, one person may be using a family gift, while the other is contributing savings or paying more towards the mortgage.

In some cases, buyers may want to record their ownership shares in a separate legal document, often called a declaration of trust. This can set out what each person has contributed and what should happen if the property is sold in the future.

Not every couple will need this. However, if contributions are unequal, it is worth raising this with your solicitor early. It is much easier to discuss these points before completion than after a disagreement has happened.

What if the gift is more than the deposit needed?

Sometimes, a family member gives more than the amount needed for the deposit paid on exchange.

This does not mean you can ignore the extra money. Your solicitor still needs to know about the full amount you have received and how it will be used.

The remaining money may go towards the rest of the purchase price, legal fees, Stamp Duty Land Tax if payable, moving costs or other agreed costs. In some cases, it may simply remain with the buyer.

The key point is transparency. Tell your solicitor how much has been gifted and where it is being held. They can then explain what evidence is needed and whether the lender needs any further information.

Do not assume that only the exchange deposit matters. Your solicitor needs to understand the full source of the money being used in the purchase.

What if the money came from someone who has died?

If the money has come from someone who has passed away, it may be inheritance rather than a standard gifted deposit.

This can still be used towards a property purchase, but your solicitor will need evidence showing where the money came from.

Depending on the situation, this could include a copy of the will, grant of probate, estate accounts, confirmation from the executors or correspondence from the solicitor dealing with the estate.

If the money has already been paid to you from the estate, your solicitor may need to see the transfer and the supporting paperwork. If the money has not yet been released, the timing may need to be checked carefully.

This is important because inheritance can take time to administer. A buyer should not assume that money from an estate will be available by exchange or completion unless this has been confirmed.

If your deposit depends on inheritance money, tell your conveyancer as soon as possible. If the money forms part of an estate, you may also need advice from a wills and probate solicitor.

How to avoid delays with a gifted deposit

Most gifted deposit delays happen because the solicitor or lender finds out too late.

The best thing you can do is tell your mortgage adviser and solicitor about the gift at the start. Even if the money has not been transferred yet, it should still be mentioned.

You should also speak to the person giving the gift. Make sure they understand that they may be asked for ID, proof of address, bank statements and a signed declaration. Some donors are surprised by this, especially if they have never been involved in a property purchase before.

It is also important to be honest about whether the money is a gift or a loan. If you are expected to pay it back, say so. Trying to describe a loan as a gift can cause serious problems with your lender and may put the purchase at risk.

You should also raise anything unusual early. This might include money from overseas, gifts from more than one person, inheritance money, a gift from someone who is also connected to the seller, or a donor who expects to live at the property.

These situations may still be manageable, but they may need extra checks.

Support for first-time buyers

First-time buyers are not expected to understand every part of the conveyancing process before they begin. That is what your conveyancer is there for.

A good conveyancer should explain what is needed, why it is needed and when you need to provide it. This is especially important when you are using a gifted deposit and dealing with lender requirements for the first time.

One recent JR Levins client said:

“Louise and Rachel were very helpful knowing we had not bought a property before and guided us through it all brilliantly.”

That kind of guidance can make a real difference. Buying your first home is a major step, and it is normal to have questions along the way.

You can also read how fixed-fee conveyancing helped Cathy feel clearer about the moving process.

At JR Levins, our conveyancing team supports first-time buyers across Liverpool, Huyton, Widnes, Runcorn, Birkenhead, Cheshire and the wider Merseyside area. We can explain what documents are needed, liaise with your lender and help you understand the legal steps from instruction through to completion.

If you are also trying to understand the likely legal costs of buying your first home, you can view our pricing structure here. To obtain a personalised quote for your matter, click here.

If you are buying your first home with a gifted deposit, speak to our conveyancing team as early as possible. We can help you understand what is needed before delays arise.

For professional advice you can trust, contact your local legal experts at JR Levins.

Get a Quote