Deposits given: It's not just for first-time buyers

When we talk about grant deposits, the conversation usually focuses on first-time buyers and the bank of mom and dad.

However, while family support is becoming an increasingly important part of helping younger generations get onto the property ladder, gifted deposits can also play a valuable role for existing homeowners, landlords and even those purchasing properties from abroad.

Recent research from Savills It highlights how important financial support is for a family. Its figures show that 53% of first-time buyers receive some form of help from family members, with gifts and loans totaling £8.3bn in 2025. When inheritances are included, this figure rises to £11bn.

Interestingly, the research also found that nearly half of first-time buyers receiving gifts or loans received support from relatives other than their parents, suggesting that the traditional mom-and-pop bank is now extending to grandparents and other family members.

However, what is perhaps not widely understood is that grant deposits are not just suitable for people buying their first home. They can also help existing homeowners move to a larger property, reduce the mortgage required on a new purchase or provide extra money to invest in a buy-to-let.

How gifts can help homeowners make their next move

For many homeowners, moving to a larger property can be as financially challenging as getting onto the property ladder in the first place.

While they may have built equity in their current home, rising home prices, moving costs, and mortgage affordability requirements can make their next purchase difficult.

Recent research from Barclays found that 22% of non-movers expect to need financial help from family for their next purchase, while 34% feel stuck in their current home because moving is too expensive.

A gifted deposit can help fill this gap, either by increasing the total amount available for purchase or reducing the mortgage the buyer needs.

For example, someone buying a property worth £500,000 with a deposit of £125,000 would need a mortgage of £375,000, which is 75% of the loan-to-value (LTV). However, if a family member gave them an additional £25,000, increasing their deposit to £150,000, the mortgage required would fall to £350,000, or 70% of the LTV.

This can make a meaningful difference, as not only will the buyer have less than £25,000 to borrow, but a lower maximum value could also give them access to a wider range of mortgage products or more competitive interest rates, depending on the lender.

Of course, a larger deposit does not automatically guarantee a better mortgage deal, and lenders will still assess your income, spending, credit history and overall affordability.

However, it shows how financial support from family can help current homeowners as well as first-time buyers.

Can grant deposits help real estate investors?

Another area where grant deposits can sometimes be overlooked is the buy-to-let market. For landlords looking to purchase an additional property, receiving a gift of money can reduce the amount they need to borrow, which can improve the overall financial situation of the investment.

For example, a larger deposit can reduce monthly mortgage interest costs and improve cash flow, and may also help an investor meet a lender’s rental affordability requirements, the latter of which can be an important consideration with increasing interest rates and more challenging affordability assessments.

However, not all buy-to-let lenders accept grant deposits, and those that do will have different rules about who can advance the money and how it must be proven. Also, while gifts from parents or grandparents are generally well understood, some lenders will also consider gifts from adult children, siblings, other relatives or even friends.

This means that financial support does not always have to flow from parents to children, and in some circumstances, adult children may be in a position to help their parents buy or invest in a property.

The important point is that the gift must be acceptable to the lender and clearly documented. For investors purchasing through a limited company, the situation can be more complex, especially where the funds are provided by someone who is not a director or shareholder. This makes it especially important to determine your lender’s requirements before committing to a purchase.

Where does the gifted deposit come from?

One of the most important considerations in any gifted deposit is the source of the money.

Lenders and attorneys must prove that the money came from a legitimate source and that the person making the gift does not expect repayment. This usually includes a signed acknowledgment of the donor’s deposit, confirming the amount advanced, the relationship between the parties, and that the donor will have no financial interest in the property.

There may also be requests for bank statements, identity documents and evidence of how the money was originally accumulated. For example, if a family member is giving money from their personal savings, the process may be relatively straightforward.

However, when the funds come from the sale of real estate, inheritance, investments, or a family trust, additional documents may be needed to determine the source of the funds. This becomes especially important for expatriates and foreign investors.

If someone living abroad receives a gift from a relative abroad, the lender and solicitor may need to see a more detailed history of the funds, including statements from overseas bank accounts and evidence of transfer to the UK.

Some lenders will accept outside gifts, while others impose restrictions on where the money comes from or who can give it. As a result, it is important not to assume that because a family member has funds available, they can automatically be used toward a mortgage deposit.

Planning ahead can prevent delays

In my experience, one of the biggest challenges with grant deposits is not necessarily whether the lender will accept the money, but whether the appropriate evidence is available when it is needed.

The buyer may have already found a property, agreed on a purchase price and begun applying for a mortgage before discovering that additional documents are required from the person making the gift.

This can be particularly difficult when the donor lives abroad, where funds pass through several accounts or where trustees are involved.

For this reason, I always encourage anyone considering using a gifted deposit to speak to a mortgage advisor as soon as possible, ideally before making an offer. The advisor can identify which lenders are most likely to accept the proposed arrangement, what documentation is required and whether an additional deposit could improve the mortgage options available.

It is also worth considering whether the person making the gift should seek independent legal or tax advice, especially where large sums are involved.

Ultimately, gifted trusts can provide valuable financial support at different stages of someone’s estate ownership. Whether it’s helping a first-time buyer purchase their first home, allowing a current homeowner to move to a larger property, or helping an owner reduce their borrowing, the principle is much the same.

The key is to ensure that the money is a genuine gift, that the lender is comfortable with its provenance, and that the appropriate evidence is in place. With the right preparation, a gifted deposit can make a huge difference to the mortgage options available, regardless of whether someone is purchasing their first or fifth property.