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Money Moral Dilemma: Should I pay my parents interest?
Former_MSE_Nick
Posts: 463 Forumite
This week's MoneySaver who wants advice asks...
Some years ago my parents lent us £7,000 towards our dream house, for which we agreed to pay them £60 a month. We recently sold the house, so I offered them the remainder less the total we'd already paid. Now they're saying they want the full amount back in addition to what we've been paying. They didn't mention interest at the time and that seems a high rate - should I pay?
Some years ago my parents lent us £7,000 towards our dream house, for which we agreed to pay them £60 a month. We recently sold the house, so I offered them the remainder less the total we'd already paid. Now they're saying they want the full amount back in addition to what we've been paying. They didn't mention interest at the time and that seems a high rate - should I pay?
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Comments
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I would say it depends on how much you have paid so far really.
If you've only paid off say £600 then that's an interest rate of 8.5% and not all that bad. If you've paid £3,000 already then it's a different matter.
From personal experience, when I borrowed a small amount from a relative for my first home I paid them all the amount borrowed and just let the SO run for an extra 2 months as a thank you / interest element. It wasn't asked for but personally I felt it the right thing to do.0 -
Yes, to keep them sweet so that when they die you inherit everything.0
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Yes you should pay it if you can afford it.
You should have fully discussed payment and interest when you borrowed the money but if you make an issue of this now I wouldn't expect their help, financial our otherwise in the future.Currently studying for a Diploma - wish me luck
Phase 1 - Emergency Fund - Complete :j
Phase 2 - £20,000 Mortgage Fund - Underway0 -
Sounds like the 'money saver' has upset his/her parents in some way.
If it was a real person, I'd say do what your parents are asking, otherwise risk alienating them even more. But if you'd be happy to ruin the relationship by ever, give them back the balance of the £7000 and nothing else.Early retired - 18th December 2014
If your dreams don't scare you, they're not big enough0 -
Figure out a fair interest rate and pay your parents what you owe. Then never talk to them again - ideally after you have your first child.0
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Borrowing money from family members always seems to cause ructions. I'm sorry things have turned sour for you.
Firstly, you say they lent you the money some years ago for your dream house
You've had the joy of living in your dream home which presumably has increased vastly in value over the years, although you don't say how long you've had the house. In the meantime, did your parents have to go short on things and curtail their enjoyment of life to help you out?
They may be feeling a bit miffed to see you making a considerable profit from their money which they maybe could have done with spending themselves over the years.
I can't see any other reason why they should suddenly ask for a higher payment than the one that was agreed at the beginning. Maybe I'm missing something:o0 -
This I find more than a touch vindictive, and am surprised it's come from you Ringo!ringo_24601 wrote: »Figure out a fair interest rate and pay your parents what you owe. Then never talk to them again - ideally after you have your first child.
As with all these fictional MSE dilemmas, the vignette is ill-thought through and missing key information. There is no way that money would have been lent without clear repayment terms.Value-for-money-for-me-puhleeze!
"No man is worth, crawling on the earth"- adapted from Bob Crewe and Bob Gaudio
Hope is not a strategy
...A child is for life, not just 18 years....Don't get me started on the NHS, because you won't win...I love chaz-ing!0 -
@ VfM4meplse
Please remember this is a family loan - not a bank agreement - and things may not have been put in writing. Memories fade over time.There is no way that money would have been lent without clear repayment terms.
Even so, if the parents did not say they wanted interest at the time, they have a cheek asking for it now.
I'd try to negotiate a reasonable sum. Depends on what kind of people the parents are as to how far I'd push it. But being the (lending) victim of a similar "vary the terms after the fact" loan agreement with my brother
I intend to go through the courts (I have an admission of the debt and the repayment terms in writing).
Dave0 -
If I lent my kids money like this I would never, ever dream of charging them interest. I think parents like this with this attitude aren't kind loving mothers and fathers. In fact I believe these people to be tight-fisted nasty rsoles.“Learn from the mistakes of others. You can never live long enough to make them all yourself.”
― Groucho Marx0 -
It seems really mean to me. However, have you made an awful lot of money on your property? Maybe they are struggling now and don't have a pension plan? That's the only reason I can think that they would behave so tight-fistedly0
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