The short answer
A gifted deposit is accepted by AF Credit on bridging loans where three things are in place: a signed gift letter from the donor, a bank statement showing the transfer, and ID verification for the donor. These are standard AML (anti-money-laundering) requirements, not unusual obstacles — and in straightforward cases they can be cleared within hours.
The issue is that many lenders treat gifted deposit evidence as a reason to decline rather than a documentation exercise to work through. If your original lender withdrew or declined because of a gifted deposit, that is a lender problem, not a deal problem.
- Gift letter — signed by the donor, confirming the amount, that it is a gift not a loan, and that the donor has no interest in the property
- Bank statement from the donor — showing the funds leaving their account (or the balance available to gift)
- Donor ID — passport or driving licence and proof of address
- Source of funds — where the donor's money came from (savings, sale of property, inheritance). Standard for all AML checks
This is assemblable in hours where the donor is available and cooperative. AF Credit's solicitors handle the verification process — you do not need a separate AML check on the donor before coming to us.
Why some lenders refuse gifted deposits
UK lenders are legally required to verify the source of all funds in a transaction. A gifted deposit requires more documentation than straightforward own-funds equity — the lender must verify not just the borrower's funds but the donor's identity and the origin of the gift. For lenders with rigid compliance processes or outsourced underwriting, this additional step is sometimes treated as a reason to decline.
In auction transactions, this creates a specific problem: the lender approves in principle, runs due diligence, and then discovers during the legal process that the deposit is gifted. At that point, with days to the deadline, they withdraw rather than request and review the additional documents in the time available. The result is a borrower with a viable deal, a completable property, and a lender-shaped hole in their transaction.
Case study — North Leeds auction rescue: gifted deposit cleared in 24 hours
A first-time buy-to-let investor won a lot at a North Leeds auction. Their original bridging lender withdrew mid-process — citing the gifted deposit component in the borrower's funds — with 10 days remaining on the 28-day completion window.
AF Credit was contacted the same day the withdrawal notice arrived.
- Indicative terms issued the same afternoon
- Gifted deposit letter, donor bank statement and donor ID assembled by the borrower overnight
- Solicitors cleared the gifted deposit documentation the following morning
- AVM valuation returned within hours on the standard residential property
- Legal process ran in parallel; dual-representation used to compress timeline
- Funds transferred on day 9 of the remaining 10
The investor's deposit was protected. The full case study is at Auction Bridging Leeds — 9 Days.
Gifted deposits and LTV
The LTV calculation on a bridging loan is the loan amount as a proportion of the assessed property value. It is unaffected by whether the borrower's equity contribution comes from their own savings or from a gift. A borrower contributing 25% of the purchase price via a gifted deposit and borrowing 75% LTV is treated identically to a borrower contributing 25% from their own funds.
The one scenario where the source of funds affects LTV is if the deposit itself is undisclosed — i.e., if the borrower presents as contributing equity but that equity is actually a loan from a third party. Lenders treat this as mortgage fraud. A genuine gift, properly documented, is not a loan and is not treated as one.
Gifted deposits in auction transactions — why speed matters
In a standard property purchase, a gifted deposit can be evidenced over days without affecting the transaction. In an auction purchase with a 28-day completion window, a lender who withdraws over gifted deposit evidence on day 14 leaves the borrower with 14 days to find replacement finance — which must itself be arranged, valuated and completed in the remaining time.
This is manageable with the right lender. The evidence assembly takes hours, not days. The problem is that most borrowers spend the first 24–48 hours attempting to reverse the original lender's decision rather than calling a new one. If your lender has withdrawn, call AF Credit immediately.
Frequently asked questions
Yes. AF Credit accepts gifted deposits where the funds are properly evidenced — a signed gift letter from the donor, a bank statement showing the transfer, and ID verification. This is standard AML documentation and can be cleared within hours in straightforward cases.
Yes. This is one of the most common reasons we are called to step in on auction rescues. Contact us immediately with your property details, loan amount, and deadline. We issue same-day indicative terms and can clear gifted deposit evidence while the valuation and legal process runs in parallel.
No — the donor's identity must be declared and verified, but the gift does not have to come from a direct family member. All donors require the same documentation regardless of relationship.
No. AF Credit's rates are driven by LTV, property type, loan size and borrower profile. The source of the equity contribution does not affect pricing.
Overseas donors are accepted, though additional identity verification steps apply. Notify AF Credit and your solicitor immediately so the additional process can be factored into the timeline — it is manageable but takes slightly longer.
In straightforward cases — domestic donor, available and cooperative — the documentation can be assembled and cleared within hours. In the Leeds auction rescue, clearance was completed the morning after AF Credit first received the enquiry.
Don't let a lender's reluctance to process gifted deposit evidence cost you a viable deal. AF Credit accepts gifted deposits — bring us the documentation and we'll work through it the same day. 01451 514 563 or get a quote below.