Gifted Deposit or Joint Borrower Sole Proprietor Mortgage

If family are helping you buy a home, there are two quite different routes. A gifted deposit is money handed over to boost your deposit, given with the understanding that it does not need to be given back. A joint borrower sole proprietor mortgage (sometimes called a booster mortgage) lets you apply with another person, often a family member, to increase how much you can borrow, while only one of you goes on the title deeds¹.

The two are not alternatives in every case. Suffolk Building Society states plainly that you can use a gifted deposit and a joint borrower sole proprietor arrangement together¹. What differs is who is on the mortgage, who owns the property, and what the lender will ask for before it releases funds.

A gifted deposit is money given to a homebuyer to help them buy a property². It cannot be a loan, and there must be no agreement to pay it back³. Lenders will require you to declare any gifted amounts, and not declaring one could affect your mortgage application⁴.

Gifted deposit or joint borrower sole proprietor: how each one works

A gifted deposit is a straightforward transfer of money. Parents, grandparents, siblings and other close family members give cash towards the purchase, and the money becomes part of your deposit⁹. It is not a loan, and it is often given by family members on that basis¹⁰. The lender wants to see that the money is genuinely yours to use, that nobody else has a claim on the property because of it, and that you are not carrying a hidden debt.

A joint borrower sole proprietor mortgage works differently. It lets you apply with another person, often a family member, to increase how much you can borrow¹. The other person joins the mortgage and agrees to contribute equally to the repayments, but does not own the property¹¹. That distinction matters: the non-owning borrower is on the hook for the debt without any share of the asset.

Unlike some products that use the guarantor's savings or property as collateral, joint and JBSP mortgages will still require the buyer to put up a deposit, which varies from deal to deal⁸. So a JBSP is not a way of avoiding a deposit; it is a way of borrowing more against the income of two people.

What lenders ask for when a deposit is a gift

The paperwork is the part most buyers underestimate. If you have been given the deposit as a gift, you will need a letter from whoever gave you the money¹². Both the solicitor and the lender will want to see a signed letter from the parties gifting the money¹³. You will need to tell both your lender and your solicitor¹⁴.

The letter itself has a specific job. HSBC UK says it needs to confirm the deposit is a non-refundable and unconditional gift, and that no interest is claimed on the property¹². The same requirement appears in HSBC UK's application documents guidance: where your deposit is being gifted by a family member, your solicitor will need to obtain a letter from the donor confirming the deposit is a non-refundable and unconditional gift and that no interest is being claimed in the property¹³.

A gifted deposit letter is signed by the gifting party or parties⁴. Some lenders use their own template. Together, for example, asks the applicant's solicitor to send its gifted deposit template, which must be filled out before funds are issued¹⁵. Principality says everyone involved agrees to sign a form confirming the deposit is a gift, and that everyone involved agrees the applicant is the sole owner of the property¹⁶.

Family Building Society requires a signed gift letter from the giftor plus evidence of funds in a UK account and the giftor's details, including names, dates of birth and relationship to the applicants. Suffolk Building Society says the person gifting money for a house deposit will need to submit proof the deposit monies are available in a UK-based account⁷.

Who can give a gifted deposit and which mortgages accept one

Most lenders define the acceptable donor by relationship. Santander says gifted mortgage deposits usually come from close family members, including parents, step-parents, grandparents and siblings¹⁸. Halifax sets out a longer list: parents, stepparents and parents-in-law; siblings, half-siblings, step-siblings and brothers- and sisters-in-law; grandparents and step-grandparents; aunts and uncles related by blood; nieces and nephews; partners living with the applicant; and the applicants' children, stepchildren, sons- and daughters-in-law and adopted children¹⁴.

Some lenders are narrower. Teachers Building Society limits the person providing the gift to parents, grandparents, siblings, aunts and uncles¹⁹. The Mortgage Lender allows gifts from family members such as parents, grandparents and spouse, with gifts from wider family members considered on a case by case basis, and the donor cannot reside in the property²⁰. Kensington Mortgages accepts gifted deposits from immediate family members: parents including step-parents, grandparents, non-dependent children, brothers, sisters, uncles and aunts²¹.

Others are wider. Gatehouse Bank's Home Purchase Plan accepts gifted deposits from immediate and extended family members, including parents, spouses, children, grandparents, siblings, aunts, uncles, legal guardians, step-relatives and in-laws, and also states on its product page that gifts are accepted from non-family members²⁰. Vendor gifted deposits are not acceptable, though builder or developer incentives may be accepted up to 5% of the purchase price, and a signed Gifted Deposit Declaration is required²⁰.

Commonly excluded donors include family friends, an employer, a developer or your landlord, an aunt or uncle who is not your blood relative, cousins, and foster or guardian children¹⁴.

Using a gifted deposit and a family assisted mortgage together

The two routes can be combined. Suffolk Building Society answers the question directly: can you do gifted deposit and joint borrower sole proprietor in conjunction with each other? Yes you can¹.

There is one restriction worth knowing. If the non-owning borrower also lives in the property, they would not be able to also gift the deposit⁷. In other words, the same person cannot both join the mortgage as a borrower and hand over the deposit if they are going to live there. Suffolk Building Society also says it accepts gifted deposits on its standard UK residential, buy to let and holiday let mortgage products, subject to certain criteria⁷.

The deposit itself is still required. Joint and JBSP mortgages will still require the buyer to put up a deposit, which varies from deal to deal⁸. So combining the two does not remove the need for savings; it changes who is on the loan and where the deposit came from.

A JBSP puts a second person on the mortgage but leaves the title with one owner.

Where a gifted deposit can hold up a mortgage application

The most common problem is documentation. Gifted deposits need to be properly documented to avoid raising red flags during the mortgage application process¹⁷. If the money is a gift, you will need to provide evidence to the lender that you will not be required to pay it back, and some lenders place a cap on what percentage of a deposit can be gifted²³.

Not declaring a gifted deposit could affect your mortgage application¹⁸. Lenders will require you to declare any gifted amounts⁴. It is possible to use gifts from more than one person to make up your mortgage deposit, and NatWest says it is possible to use multiple gifts, with information about the source of each gift and individual gifted deposit declarations for each sum¹⁸.

Inheritance tax is a separate consideration. A child might need to pay inheritance tax on a gifted deposit if the parent dies within seven years of handing over the money²⁴. NatWest notes that inheritance tax liability can arise where the gifted amount is above £3,000⁴. Suffolk Building Society goes further: should the gifted deposit exceed £100,000, the person gifting the funds will be required to take Inheritance Tax Advice, for which they will be responsible for meeting the cost⁷. HMRC's own guidance on specified transfers sets a limit for an estate to qualify as an excepted estate: specified transfers made within 7 years of death cannot exceed £250,000²⁵.

Some lenders treat gifted deposits as an exception to their normal deposit rules. Bath Building Society says the only exceptions to its usual position are when the deposit is gifted by a family member, subject to a deed of gift, or where funds have been raised against another owned property²⁶.

If a lender declines a gifted deposit, the usual reasons are the donor falling outside the accepted relationship list, missing or unsigned paperwork, or funds that cannot be evidenced in a UK account. Where a buyer needs help beyond a gift, other routes exist, including family assisted mortgages and guarantor arrangements, and free guidance is available from MoneyHelper.