How Much Can My Parents Gift Me for a House?

What is a gifted deposit?

A gifted deposit refers to money given to homebuyers to help them buy a home. The amount can contribute towards the deposit or equate to it. Unlike a loan, gifted deposits don’t need to be repaid. The person giving the money has no legal rights to or interest in the property.

How big can gifted deposits be?

There is no limit on how large gifted deposits can be unless your mortgage lender claims otherwise. However, you may incur an inheritance tax if your deposit is too big.

Do I pay inheritance tax on gifted deposits?

Gifted deposits are tax-free, up to £3,000. If your parents give you more money towards a deposit and they pass away within seven years, you must pay inheritance tax.

Do I have to declare a gifted deposit?

Yes. Lenders want to ensure that the money is a gift and not a loan. They may require your parents to fill out a Gifted Deposit Letter outlining the following:

• Your parents’ names 
• Your name 
• The amount of money gifted 
• The source of the money  
• The nature of your relationship 
• Confirmation that it’s a gift that doesn’t require repayments 
• Evidence that your parents are financially able to support 

Pros and cons of gifted deposits

Pros	Cons
Lower monthly repayments as you can put down a bigger deposit.	Reduced mortgage options if the deposit is through a loan instead of a gift.
You’ll access better mortgage deals.	Lenders may require additional information like proof of funds and proof of ID.
A tax-free gift, provided your parents live for seven years after they gift you the deposit.

Are gifted deposits the best way to help?

There are other ways your parents can help if they can’t gift you a deposit. They can lend you the money or take out a mortgage with you.

Lending a deposit

If your parents want to lend you money for your house deposit, they should draw up a loan agreement. This should outline when the loan needs to be repaid, if any interest is due and what happens if someone dies or the house is sold.  

Loaning money may affect your mortgage affordability because lenders will add the loan to your outgoings as additional borrowing.  

The ‘Bank of Mum and Dad’ mortgages

The ‘Bank of Mum and Dad’ refers to any financial help your parents offer to support you in buying a house. The most common types of mortgages include:

• Guarantor mortgages
• Joint mortgages
• Family offset mortgages
• Joint borrower sole proprietor (JBSP) mortgages

Learn more about the different mortgage types in our comprehensive guide.

The Parent Power scheme

If your family can contribute to your deposit, we’ll match it up to a maximum of 5% of the purchase price with the Parent Power scheme. This way, you’ll be able to afford more and access competitive mortgage deals.

Whether you’re a first or second-time buyer, we have a home for you. Explore our brand-new developments across the UK – energy-efficient and equipped with modern features.

Call our Sales Advisers to discuss what offers you could be eligible for and reserve your home today.