As its been 20 years since I last bought a house I don't understand this gifted deposit thing. Back in the olden days you agreed the deposit to be paid with the vendor - it was something you mutually agreed and had nothing to do with the mortgage or house value whatsoever. In my case I agreed with the vendor to pay a 5% deposit which was based on the agreed sale price (not the advertised price or valuation). I then took out a mortgage to cover the balance once I had put my savings into it. The mortgage lender then valued the property to make sure their asset was a worthwhile thing to invest in etc etc. should I default on the mortgage. This risk on their part obviously varies according to the size of the mortgage but they based it purely on their valuation of the property minus their mortgage amount. They never told you their valuation on the property just that they considered the mortgage to be less than it's value and since they are the prime charge on the property i.e before you, thats all they cared about.
