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Gifted Deposit mortgages – helping first time buyers onto the property ladder

Written by Ipswich Building Society

1 May 2018


English Housing Survey, Gifted Deposit

3 min read

According to the English Housing Survey 2006-07, about three quarters (72%) of those aged 35-44 were owner occupiers, however by 2016-17 this had fallen to half (52%). The proportion of 35-44 year olds in the private rented sector has increased in line with this trend (11% to 29%). With would-be first time buyers finding it difficult to access the housing market there are several options which may be available to them, including gifted deposit mortgages.

What is a gifted deposit mortgage?
A gifted deposit is quite simply where a third party is giving the buyer the money for their deposit. This could be a portion of the deposit, or the whole amount, but importantly this cash must be a ‘gift’ which does not need to be repaid.

Who can provide this deposit?
This will vary between mortgage lenders, but at Ipswich Building Society we are able to accept deposits that have been gifted from close family members such as parents, grandparents, brothers or sisters and also from step-parents, step-siblings, step-grandparents, applicants’ children, applicants’ step-children or applicants’ adopted children.

If I am gifting the deposit to a family member, how does this work?
If you are providing the deposit you will be required to declare the sum of money is an unconditional and non-refundable gift, with no interest is to be charged or repayments to be made. You must be aware that you will have no rights, interests or claims in the property, will not have any registered legal charge over the property and that you will not reside in property now or in the future. In addition to this, at Ipswich Building Society we will require proof that the deposit monies are available in a UK based account. You should also be aware that if the amount of the gifted deposit exceeds £100,000 you will be required to take Inheritance Tax Advice at your own cost.

What do I need to do to apply for a gifted deposit mortgage?
Firstly it is important that the person who is giving the deposit must agree to the declarations listed above. You will then need to prepare the usual documentation required when submitting a mortgage application – take a look at our guide to the mortgage process. For applicants seeking a mortgage at 95% loan to value (when available), with the full deposit amount being gifted, we will also require you to have 12 months of continuous rental history and be able to show us this.

This information provides a brief overview of our gifted deposit mortgages. To find out more speak to one of our mortgage consultants on 0330 123 0773 to see how we can help.

This article was published under our previous name of Ipswich Building Society. We changed our name in 2021 – find out more.

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