Will your gift letter format be acceptable to the bank?

If you’re like one of many Australians, you may have asked your parents to gift you the money for your deposit.

With some lenders, a gifted deposit means you don’t need to prove genuine savings and essentially get into the property market with no deposit.

The trick to getting approved is using a gift letter template that the bank will accept as proof that the money from your parents is non-refundable.

Why might the bank need a gift letter?

A gift letter is a letter from your parents or a close 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 they are not borrowing the deposit off credit cards or a personal loan.

Some Australian lenders won’t 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 loan options available to you.


Gift letter template 1 – Standard

This is the gift letter template for a mortgage that’s accepted by most lenders.

If your lender has specifically asked for a statutory declaration then please use the 2nd template.


1/10/2018

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 arranging your home loan, please email your signed letter through to them.

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


Gift letter template 2 – Statutory Declaration

Use this mortgage gift letter template if your lender has specifically asked for a statutory declaration.

Please note that some lenders such as Suncorp have their own statutory declaration template.

If you’re 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 2018


(SIGN)

Adam Smith


Before me:

(SIGN)

Name: (Name of JP)
Justice of the Peace #: 123456



If a Home Loan Experts mortgage broker is arranging your home loan, please email your signed letter through to them.

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, this is assessed as a borrowed deposit by the banks.

If you get a loan from a family member to help you buy a property, only a select few banks will consider your application.

Please contact us if you’re having trouble finding a lender.


1/10/2018

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 of $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 arranging your home loan, please email your signed letter through to them.

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 confirming that they are fully aware of what they’re doing.

This is particularly important if you’re 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 us 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 only a few lenders specialise in this kind of lending.

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 doesn’t 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?

Our mortgage broker brokers are experts in no deposit home loans and we know which lenders can accept a gifted deposit in lieu of genuine savings.

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

  • GumBall

    Can I use a family gift of USD $15,000 from my granny as my deposit? She is a US citizen and I have an Australian PR visa.

  • Hey GumBall
    Yes, you can use a non-refundable gifted deposit from your family living overseas. However, you need to transfer your money to an Australian bank via a foreign exchange (FX) company by creating an account that links your granny’s bank in the USA and yours in Australia. Once this has been set up, you can transfer money from a foreign bank account to your Australian bank account.

  • Butcher

    Are there any restrictions as to who I can receive a gifted deposit from to apply for a home loan?

  • Hi Butcher,
    Lenders have very strict lending criteria and this is why only family gifts from your parents are accepted. Gifts from an immediate family member are considered on a case-by-case basis. The reason banks are strict with family deposits is because they are concerned about the risks of fraud and the fear that the money you get is a loan that you have to pay back and not a gift. If you have to pay it back, it’s a liability and not a genuine deposit.

  • Jyoti Katti

    My friend had borrowed money from me and now he is returning it to me, is it acceptable by bank if mentioned in the letter.

  • Hi Jyoti
    Yes it is acceptable if the letter explains that your friend is repaying a loan to you and you are using this as a deposit for a property. However it would not be considered to be genuine savings https://www.homeloanexperts.com.au/genuine-savings/no-genuine-savings-loans/ so it’s helpful if you have a rental history or other evidence we can use. Feel free to call us on 1300 889 743 and we can assist you further with this.

  • Jojo Huang

    Hi, I will be receiving a gift deposit from my Mum and sister. I have them write out a gift letter already and the bank has conditionally approved my loan. On the day of exchanging the 10%, can the gift deposit be in the form of a bank cheque directly from my Mum and sister’s account paying to the vendor? Or does it need to be transferred to me first and then from me paying to the vendor?

  • Hi Jojo,
    You can provide cheques directly from your mum and sister. However check with your real estate agent just to be sure.

  • Leah

    I have sent money to my friends account i have proof its all my money so i wouldnt spend it and i also have proof of rental history but i got told it needs to be in my account my friend has send back the money with a gift and a stat dec saying that it is my savings not his will it be hard to get a loan because of this ??

  • Hi Leah,
    If there’s a Stat Dec stating that it’s your money and signed by your friend, then some lenders may accept it. Moreover, it would be lot easier if you can deposit the same in your account. Moreover, not all lenders have genuine savings requirement if you borrow 85-90% of the property value. If you want to know more, then call us on 1300 889 743 or enquire online https://www.homeloanexperts.com.au/free-quote/ and speak with a specialised mortgage broker.