Gift Letter For A Home Loan

With a gift from your parents, you can apply for a mortgage with no deposit!

Which lenders will accept a gifted deposit? Call us on 1300 889 743 or fill in our free assessment form.

Why might a bank need a gift letter?

A gift letter is a letter from a friend or relative confirming that they are giving you a gift for you to use as a deposit to buy a property.

Lenders need to confirm the source of a borrower’s deposit to make sure that they are not borrowing the deposit off credit cards or a personal loan.

Some Australian lenders will not lend to people who have received their deposit as a gift. Please read our page about home loans with a gifted deposit for more information about the loans available to you.

Quick find:

Gift letter template 1 - Standard

This is a normal letter template as used by most lenders. If your lender has specifically asked for a statutory declaration then please use the 2nd template.

1/10/2014

To Whom It May Concern:

Re: John Smith

I confirm that I am giving my son John Smith an unconditional gift of $50,000 for him to use to buy a property. This gift is not repayable or refundable.

Should you require any additional information please do not hesitate to contact me on 02 0000 0000.

Regards,

(SIGN)

Adam Smith
1 George St Sydney NSW 2000

If a Home Loan Experts mortgage broker is currently arranging your loan, please both fax and mail the letter to us using the fax number and address on our contact us page.

Which lenders will accept a gifted deposit? Call us on 1300 889 743 or enquire online.

Gift letter template 2 - Statutory Declaration

Use this letter if your lender has specifically asked for a statutory declaration to confirm the gifted deposit. Please note that some lenders such as Suncorp have their own statutory declaration template. If you are unsure what template to use, please call us on 1300 889 743 to discuss.

Statutory Declaration

I/We: Adam Smith

Of: 1 George St Sydney

in the State of New South Wales, do solemnly and sincerely declare as follows:

I will give my son John Smith a total of $50,000 to assist him to purchase a property. This gift is unconditional, non repayable and non refundable.

And I/we make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Oaths Act, 1900 (as amended).

Subscribed and declared at Sydney NSW

This 1st day of January 2014

(SIGN)
Adam Smith

Before me:
(SIGN)
Name: (Name of JP)
Justice of the Peace #: 123456

If a Home Loan Experts mortgage broker is currently arranging your loan, please both fax and mail the letter to us using the fax number and address on our contact us page.

Please read our page about gift deposit home loans as only a select few lenders can accept this type of loan.

Gift letter template 3 – Family loan

In the event that the gift is repayable, then this is assessed as a borrowed deposit by the banks. If you get a loan from a family to help you buy a property then only a select few banks will consider your application. Please contact us if you are having trouble finding a lender.

1/10/2014

To Whom It May Concern:

Re: John Smith

I confirm that I am advancing a loan to my son John Smith to assist him in buying a property. The details of this loan are as follows:

  • Loan amount $50,000
  • No interest is payable.
  • Repayments of $1,000 / month
  • The loan will be secured by a caveat behind the loan by ABC bank / The loan will be unsecured.

Should you require any additional information please do not hesitate to contact me on 02 0000 0000.

Regards,

(SIGN)

Adam Smith
1 George St Sydney NSW 2000

If a Home Loan Experts mortgage broker is currently arranging your loan, please both fax and mail the letter to us using the fax number and address on our contact us page.

Which lenders will accept a gifted deposit? Call us on 1300 889 743 or complete our free assessment form.

Gift letter template 4 – Guarantor support

If your parents have decided to use a property they own as additional security for your loan then we may require a letter from them just confirming that they understand what you are doing. This is particularly important if you are consolidating debts while buying a property. The letter must be signed by all guarantors.

1/10/2014

To Whom It May Concern:

Re: John Smith

We are well aware of our son John’s financial position and believe he is now responsible enough to handle the commitment of buying a property. He has been paying his current debts on time and is never short of money so we are happy to help him refinance his debts into the new loan when buying a property.

Should you require any additional information please do not hesitate to contact me on 02 0000 0000.

Regards,

(SIGN)

Tom & Jane Smith
1 George St Sydney NSW 2000

What catches people out?

Did you know that some banks have a policy which allows them to accept a gift as a deposit, yet their credit scoring system assesses these applications in a very harsh way. As a result, many people get declined.

Secondly, some people are actually borrowing their deposit from their parents and intend to repay it later. This is a loan, not a gift, and it isn’t accepted by every lender.

The key is to apply with a lender that sees people with a gift as a low risk borrower.

Bank requirements for gift letters

Australian lenders have strict requirements for letters confirming the source of a deposit and will often ask for a letter to be amended if it does not meet their requirements.

Your gift letter should be:

  • Dated
  • Signed
  • Contain the name of the person who signed the letter
  • Contain the name of the person receiving the gift
  • Confirm the gift amount
  • Confirm that the gift is “unconditional, non repayable and non refundable”

Most lenders will accept a faxed copy but some will require your mortgage broker to hold the original on file.

Which bank can approve your loan?

If you need the services of a mortgage broker to help get your loan approved then why not talk to us at Home Loan Experts? We know which lenders can accept a gifted deposit and which require genuine savings.

Please call us on 1300 889 743 or complete our free assessment form to speak to one of our experienced staff.