Help from family is one of the most common ways first-time buyers in Scotland put a deposit together. Lenders generally accept it, provided it is a genuine gift and can be properly evidenced. Most of the problems we see come not from the gift itself but from not knowing what will be asked for, or from a well-meant decision — such as putting a parent’s name on the title — that has consequences nobody anticipated. This guide sets out what is usually involved. It is general information, not legal or tax advice.
Looking for advice on your own situation rather than the general picture? Our first time buyer mortgage advice page is the place to start, or you can talk it through with an adviser using the form below.
Gift or loan: why the difference matters
A gifted deposit is money given to you with no expectation of repayment and no stake in the property in return. That is what makes it acceptable to most lenders: it does not create another debt, or another claim on the home.
If the money is really a loan — even an informal family one — it has to be disclosed as a loan. A repayable loan is a commitment that affects what you can borrow, and many lenders will not accept a borrowed deposit at all. Describing a loan as a gift is not a technicality: the declaration is made to the lender, and the lender relies on it.
Who can give a deposit
Parents and grandparents are the most widely accepted donors. Some lenders accept gifts from other relatives; fewer accept gifts from friends; and money from the seller, a builder or anyone else with an interest in the sale is treated very differently. If the person giving the money is not a close family member, check that the lender will accept the gift before you apply.
The gifted deposit letter
Most lenders ask the person giving the money to sign a letter or form confirming the gift. The wording is set by the lender, but it usually confirms:
- The amount of the gift.
- That it is not repayable and is not a loan.
- That the donor takes no interest in the property in return.
- The relationship between the donor and the buyer.
Use the lender’s own form where it has one. Your solicitor may also ask for their own confirmation as part of the purchase.
Identity, evidence and where the money came from
Lenders and solicitors both have to understand where the money for a purchase comes from. Solicitors carry out these checks under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, and a gifted deposit is part of the money they need to trace.
In practice, the person giving the money should expect to be asked for:
- Identification — photo ID and proof of address, in the same way as the buyer.
- Bank statements — showing the money in their account, and usually the transfer to the buyer.
- The source of the money — for example savings built up over time, the sale of a property, an inheritance or a pension lump sum, with evidence to match.
Money that passes through several accounts shortly before settlement, or arrives from overseas, usually needs more explanation. The simplest approach is to keep the trail short, have the paperwork ready, and tell your solicitor and adviser early who is giving the money and where it is coming from.
Will the person giving the money live in the home?
If a parent or other donor is going to live in the property, tell the lender at the outset. Lenders usually ask for details of every adult who will live in the home but is not a borrower, and they will normally be asked to sign a form confirming that they have no interest in the property and that any rights they have rank behind the lender’s. Your solicitor will explain the form and what it means.
Lenders may look more closely at a gift from someone who will also live in the home, so this needs to be clear from the start.
Putting a parent or donor on the title
Families sometimes consider making the parent a joint owner, so that they have a share in the home they are helping to buy. That is a very different arrangement from a gift, and it can have significant consequences:
- First-time buyer relief — Revenue Scotland’s guidance is that where there is more than one buyer, the relief is available only if each buyer meets all of the conditions, including being a first-time buyer. A parent who owns or has owned a home would normally mean the relief is not available.
- The Additional Dwelling Supplement — where there are two or more buyers and any of them already owns residential property and is not replacing their main residence, ADS can apply to the purchase. For transactions from 5 December 2024 the rate is 8% of the price. See Revenue Scotland’s ADS guidance.
- The mortgage — a parent named on the title will normally need to be a party to the mortgage as well, which brings their income, age and commitments into the lender’s assessment.
- The future — a joint owner has rights in the property until those are formally changed, which can matter if you later want to sell, remortgage or buy with a partner.
Some lenders offer arrangements designed for family support that do not involve the parent owning a share, but availability and criteria vary. Whether to put anyone else on the title is a legal and tax decision as much as a mortgage one, so speak to your solicitor before agreeing to it.
Tax for the person giving the money
A gift can have inheritance tax implications for the person who makes it. GOV.UK explains that no tax is due on a gift if the giver lives for seven years after making it, unless the gift is part of a trust, and that there are allowances and exceptions depending on circumstances.
We do not give tax advice. Anyone making a substantial gift may want to take their own legal or tax advice, and your solicitor can point them in the right direction.
When to tell your adviser and solicitor
As early as possible — ideally before you apply for an agreement in principle. Who is giving the money, how much, where it comes from and on what terms all affect which lenders are suitable and what paperwork will be needed.
Our guide to how much deposit a first-time buyer needs covers the wider costs of buying, and our first-time buyer mortgage advice page explains how we help from the first conversation to settlement.
Common questions
This guide is general information, not regulated financial advice, and reflects our understanding of the rules at the date shown. Tax treatment depends on individual circumstances and may change. Your home may be repossessed if you do not keep up repayments on your mortgage. Not all buy to let mortgages are regulated by the Financial Conduct Authority.