How Gifted Deposits and High LTV Mortgages Are Opening Doors to Property Ownership

For many aspiring homeowners, the biggest obstacle to buying their first property isn’t the monthly mortgage payment—it’s finding the deposit. In a market where house prices have outpaced wage growth, saving a 10% or 15% deposit can take years, especially for those also paying rent.

One of the lesser-known ways to overcome this hurdle is through a gifted deposit—money given, not loaned, by someone else to help cover the buyer’s upfront contribution. When combined with high loan-to-value (LTV) mortgage products, a gifted deposit can significantly reduce, or even eliminate, the need for the buyer to contribute cash upfront.

This blog explores how this approach works, what the advantages are, and what buyers need to be aware of before pursuing this strategy.

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What Is a Gifted Deposit?

A gifted deposit is exactly what it sounds like: a sum of money gifted to a homebuyer, usually to cover part or all of the required deposit. The person making the gift must confirm in writing that it is a gift, not a loan, and that they have no legal interest in the property being purchased.

While most commonly gifted deposits come from parents or close family members, some lenders also accept gifts from friends, employers, or other third parties—though this often depends on the specific lender’s criteria.

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When Combined with High LTV Mortgages

In some cases, a buyer might receive a 5% or even a 10% deposit as a gift and pair this with a 90–95% mortgage product. This combination can reduce the need for any personal savings, creating what is essentially a minimal to zero cash outlay scenario.

Let’s look at a basic example:

• Property Price: £200,000
• Gifted Deposit: £10,000 (5%)
• LTV Mortgage: 95% = £190,000
• Buyer’s Own Cash Required: £0

This structure can be particularly attractive for younger buyers, renters, or those who have been priced out of the market but have supportive family or social networks.

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Who Is This For?

This strategy tends to work best for buyers who:

• Have a good credit profile
• Are in stable employment
• Are receiving genuine gifts from eligible sources
• Understand the long-term affordability of the loan
• May not have enough saved for a full deposit but can comfortably meet monthly payments

It’s also used in some shared ownership or vendor-assisted schemes where the seller or housing association contributes toward the deposit.

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The Trade-Off: Higher Interest Rates and Stricter Criteria

While a low-deposit purchase can be life-changing, there’s a trade-off.

Lenders offering 90–95% LTV mortgages typically charge higher interest rates than those available to borrowers with larger deposits. This is to reflect the higher risk to the lender. After all, in a low-deposit scenario, the lender is taking on the vast majority of the risk, especially in volatile or falling markets.

For the borrower, this means:

• Higher monthly payments
• Lower borrowing capacity, as affordability stress tests must still be passed
• Limited choice of lenders, as not all will accept non-family gifts or high LTV loans

In some cases, the monthly cost of a high-LTV mortgage can exceed the cost of renting an equivalent property—at least in the short term.

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Things to Consider Before Accepting a Gifted Deposit

If you’re thinking about accepting a gifted deposit, or giving one, there are a few important points to keep in mind:

• Documentation is key: Lenders will usually require a signed letter confirming the money is a gift, not a loan.
• Source of funds must be clear: Anti-money laundering rules apply, so the origin of the funds must be traceable and legitimate.
• It must not come with strings attached: If the gift-giver expects repayment or wants to be named on the title deeds, the lender may reject the application.
• Some lenders are more flexible than others: Particularly when it comes to non-family gifts or unconventional arrangements.

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A Word on Structuring the Deal

Mortgage brokers and advisers play an essential role in helping buyers structure these types of purchases. Each lender has different criteria—for instance, some may not accept a gift from a friend or employer, while others are more accommodating.

Subtle differences—like how the gift is documented, when it is transferred, or even what relationship the giver has to the buyer—can influence whether a mortgage application is approved.

Platforms and brokerages with access to a wide panel of lenders, such as Empreso, can help match buyers with the right products and lenders based on their unique situation.

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Final Thoughts

A gifted deposit, combined with a high LTV mortgage, can offer a legitimate route into homeownership for those who may not otherwise be able to save a large deposit. It can dramatically reduce the time it takes to buy a home and offer an effective way for families to support one another in meaningful, lasting ways.

But it’s not a silver bullet. The costs associated with higher risk lending—particularly in the form of increased interest rates—must be carefully weighed against the benefits of getting on the property ladder sooner.

As always, getting professional advice before committing is essential. What works for one buyer might not suit another—and the long-term affordability of any mortgage should never be overlooked.

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Need a review of your options?
If you’re considering using a gifted deposit, or want to explore high-LTV mortgages with minimal upfront cost, speak to an experienced adviser before making any decisions. The right structure can make all the difference.

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