Gifted deposits and family help
Family help can make a purchase possible, but it also adds another person and another source of money to the mortgage and legal checks. The lender and conveyancer will need a clear account of where the money came from and what, if anything, is expected in return.
Whether the family money is a gift or a loan
A genuine gift is normally not repayable and gives the donor no interest in the property. A loan creates an obligation and can affect mortgage affordability or lender security. An informal promise to “pay it back one day” does not become a gift because no agreement was written.
Tell the mortgage adviser or lender about the arrangement before applying. Lenders differ on which donors and structures they accept and on the wording they require.
Evidence the family member may need to provide
The conveyancer and lender are likely to ask for identification, address evidence, bank statements showing the funds and an explanation of how the donor acquired them. A last-minute transfer through several family accounts makes that trail harder, not more convincing.
A gifted-deposit letter normally confirms the amount, relationship, that it is not repayable, that no property interest is claimed and whether the donor will occupy the home. Use the form or wording requested for the transaction rather than a generic template.
If the family member expects to own or live in the property
If the donor will live in the property, go on the title, join the mortgage or expects security, say so. That can change lender, tax and legal treatment. A parent joining only to improve affordability is not a minor paperwork choice.
The lender and conveyancer may ask similar questions for different regulatory reasons, so give both the same accurate account and the full paper trail.
Describing a loan as a gift can make the mortgage application false and leave the family agreement difficult to enforce or explain later.
Reflecting the gift in joint ownership
If a gift is intended to protect one buyer's contribution, discuss the ownership structure and declaration of trust with the conveyancer. The private agreement must not contradict the terms on which the lender accepted the money.
Tax and estate-planning questions to consider separately
Receiving a cash gift does not create one simple universal “gift tax” bill, but the donor's estate, income produced by retained interests, trusts or later repayment can raise other tax issues. Large or structured arrangements deserve individual tax and legal advice rather than a rule copied from another family's situation.
How Lifetime ISA money reaches the conveyancer
A qualifying LISA withdrawal is made through the conveyancer and is subject to scheme rules, including buyer, property price, account age, occupation and completion timing conditions. Give the conveyancer notice early and do not withdraw the money yourself on the assumption it can be relabelled later.
What to check for your purchase
- Decide whether the family money is a gift or a loan before the mortgage application.
- Tell the lender and conveyancer who is providing the money, how much they will give and whether they expect repayment, ownership or a right to live in the property.
- Keep the bank statements showing where the money came from and how it reached the buyer.
- Complete the lender's and conveyancer's own declarations.
- If the buyer is purchasing with someone else, make sure the ownership documents reflect how the gift is intended to be treated.
- Ask for individual advice on complex tax or estate planning.