MONEY MORAL DILEMMA: Should you still help your kids get on the housing ladder?

stationaryace

beingjdc wrote: »

Renting is cheaper than buying, so if they can't afford to save up any kind of deposit renting, they're really going to struggle on a mortgage. Add into that they are dead certain to be in negative equity for a few years at least, and you're putting your own security on the line.

I don't where you are but where I live renting is on par with buying at the moment and the shortage of rental properties will only aid the continuing increase of rent in the next year. We only rent as we expect to move a lot in the next few years with our jobs, which makes it marginally cheaper until we have a fixed location.

liquidswords

Beees wrote: »

I'm 24, earning £16,500 a year. Most of my monthly income goes on rent, bills, food, council tax and fuel. I live as frugally as possible, don't go out drinking, don't go on shopping sprees and have no debts. Regardless, when the deposit for a tiny flat is about £12k, I have got no hope of saving up this kind of money without it taking years. In the meantime, I'll be paying the mortgage of my landlord, one of the many buy-to-let people who have skewed the market so people like myself will never got on the property ladder (to add insult to injury, he's a useless landlord who never makes repairs when asked).
I've asked my parents if they would consider loaning me some or all of a deposit interest-free, then at least it would be a stable debt I can pay back in instalments. They have set me the challenge of seeing how much I can save out of my monthly income to prove I would be able to make mortgage payments in future and still have some left over. I'm more than willing to do this and whatever else it takes to demonstrate I can be trusted - I just don't see the point in waiting til house prices start soaring again, which is what I'd have to do to get anywhere near a proper deposit saved on my own.
To those who say parents would be taking on an unwise investment, the threat of negative equity is only a spectre if you don't intend to stay in your house long and are just in the market to keep selling and moving on. I don't believe in buying a house for this purpose - I believe in staying in it and making it a home.
Those on this forum who accuse young people of being lazy or not knowing how to save have no idea of what it's like to be in your early 20s in this country. Many 20 somethings will have university debts as foisted on them by the Labour government; I have a friend who is £16k in debt solely from student loans, and although she is a qualified teacher, she has only been able to get supply teaching jobs which don't earn enough to allow her to start paying the loans back. In the meantime, the interest piles up. How the hell is she supposed to save up a £12k deposit out of nowhere? I agree that showing some ability to be financially disciplined and save up is no bad thing. But in the current climate, we are all feeling the pinch, and those of us at the bottom of the pile need the most help. We are discriminated against for decent jobs ('not enough experience' 'too qualified' 'older staff won't like having a younger person in a more senior position to them'), given dire salaries or told the only way to up our employability is to embark on unpaid internships (WHO can afford to work unpaid?), expected to foot the bill for everyone in this country who could work but refuses to, and forced to rent from amoral landlords. Oh, and did I mention we're constantly reminded there will be no state pension for us when we got old? And don't even get me started on my £200 NHS dentist bill a couple of months ago.

Try living for a few months on my salary, see how much you would actually be able save - if anything - work out how long it would take you to save up a deposit, and then shut the hell up about young people not knowing how to budget.

Excellent post. Most of my friends are in their early twenties, as am I, and Bees is right on the mark. The insidious pressures of student loans and other drastic cut-backs to state provision have made life very difficult for the majority of people our age. I would like to add, however, that a small number of young people with rich parents, families and connections are doing extremely well. Welcome to the 51st state.

haziec

IF I had the money to spare and the daughter was sensible I would urge them to take advice - then lend it wilingly.

But......our daughter and her new husband want to buy but are waiting, they have saved up a deposit which is not large enough but have tried hard, we cannot afford hard cash to give them anyway. For the moment, they are living here, we are all happy about it, and dont pay us rent only food money, until they have a larger deposit and the market settles.
So another solution is possible, helping without giving a large sum.

A.Jones

MiserlyMartin wrote: »

Words almost fail me. I had guessed that you were a Buy To Let person way before I'd read the last few line of your post. Your post is self interest based, irresponsible, biased and quite simply the worst piece of advice I think I have ever read on an internet forum.

Why is his post irresponsible? As to poor advice, I think his advice is on the spot. In particular:

Doom and gloom plays into the hands of the buyer so buy, buy , buy and put in low offers. You'll be amazed at what you can get.

This is the point of moneysaving. Use the situation to get the best deal for yourself. If someone is selling, desperate to get rid of their house due to financial difficulties and nobody is showing interest in their house, then if you are prepared to buy it, you are in an excellent position. No-one else wants it, the seller wants (or has to) get rid of it, so the buyer is in a great position to get as much money off as they possibly can, knowing they can bargain as hard as they like and walk away if the seller does not give in.

It is no different if the situation is a person selling a house, or a store that has bought in too many items and has to get rid of them as they approach the expiry date. A good moneysaver will use the situation to their advantage.

beingjdc

stationaryace wrote: »

I don't where you are but where I live renting is on par with buying at the moment and the shortage of rental properties will only aid the continuing increase of rent in the next year. We only rent as we expect to move a lot in the next few years with our jobs, which makes it marginally cheaper until we have a fixed location.

I'm in London. We rent for £1235 a month. The flat would sell for around £285k. Average fixed rate mortgage is 7% at the moment, so I make that £1660 a month to buy interest only (and £5,700 we would have lost in equity in the last month, according to Halifax).

halia

well MIL and FIL lent DH the deposit when he bought this place with exGF.

house prices then went into negative equity 2 yrs later here, 10 yrs on and the house is worth 5-6x (even in current marke) what he paid for it.

So if they are planning to stay in house for 5+ years i'd say still lend them the money especially if I had promised it! However I would check why they don't have a deposit. If its a matter of expensive rental+student loan payback then fine, but I'd maybe sit down and ask them how much they could spare a month (even if its just a fiver) and to suggest putting my loan + their savings into a savings account over 6 months for a 'house buying fund'

I'd also make sure they knew about the other costs of owning rather than renting, like R&M.

halia

stars_bright wrote: »

I wouldn't have made the promise in the first place. When I and my then fiancee bought our first house 26 years ago we would not have dreamt of asking our parents to either lend or give us any money towards it. It was very difficult for us to get a mortgage - we finally managed to get a loan for 3 times my fiancees salary but they would not count mine at all. We had to make do with what we could find for the amount of money we could afford, having saved up for a deposit. The problem is that these days youngesters won't "make do" with what they can afford, they want the besy to start off with. I have 2 children, the oldest is 19 and having strugged to provide a roof over their heads and what they need up to now, there is no way I would consider funding his house purchase as well. When kids are old enough to have their own house, then they are old enough to finance it themselves

oh I love this type of comment. When my parents bought their first house 27 yrs ago it was a 3bed ex miners cottage that they managed to buy for 2x my dads income as a milkman (not the highest earning of jobs!)

They had both got degrees which had been fully funded INCLUDING dole money during the long summer break AND a living expenses grant.
They now both work in the public sector, have fully paid of mortgage and car including many improvements to the house, take 2-3 hols a year and have gold plated final salary schemes paid for by...................

Nowadays to buy the same house in the same place costs £70-80k, which is hardly only 2x a £14k salary, plus most people in their twenties have student debts to pay off due to cuts in grants and you can bet that very few will get the same kind of pensions that my parents are looking forward to! (just worked out that even my dads pension is more than I'm earning a year)

popsicat

Six years ago I did this - I remortgaged and loaned (with a full charge on the property) my 19 year old daughter £10,000 against a £40,000 flat and stood as guarantor - the mortgage was on her salary of £9,000. She learned a lot of money stuff - sorting out most of the mortgage and solicitor stuff herself.
The main logic on my part was that the mortgage was less than the rent on a similar property and she's an only child so I could see her right without having to repeat the exercise. Now recently she was earning £14,000 (she's now at college in New York - go figure what that costs) and the flat is worth £85,000 so unless the market crashed we couldn't do it without me lending her £30,000 - and at 51 that would be a remortgage too far.
So I guess there is a lot to weigh up -
I wouldn't put myself really in debt to do it so prices are now too high for me
How many children do you have to do it for
and isn't it better than her waiting for me to die so she inherits my home:rolleyes:
But what are mummy's for

shadej

What in the hell would anyone be doing buying their MARRIED daughter a house?
She and her husband need to stand on their own two feet. Both working and no deposit, if they cant save then they are not ready for a mortgage. My parents would help me to buy a house if I was single but not if I was married, and too right.
I bought my first house three years ago with my new hubby and I would have felt very ashamed to ask my parents (who have worked very hard to save) for money.
Its simple save a deposit or carry on renting and living at home.

shadej

Beees wrote: »

I'm 24, earning £16,500 a year. Most of my monthly income goes on rent, bills, food, council tax and fuel. I live as frugally as possible, don't go out drinking, don't go on shopping sprees and have no debts. Regardless, when the deposit for a tiny flat is about £12k, I have got no hope of saving up this kind of money without it taking years. In the meantime, I'll be paying the mortgage of my landlord, one of the many buy-to-let people who have skewed the market so people like myself will never got on the property ladder (to add insult to injury, he's a useless landlord who never makes repairs when asked).
I've asked my parents if they would consider loaning me some or all of a deposit interest-free, then at least it would be a stable debt I can pay back in instalments. They have set me the challenge of seeing how much I can save out of my monthly income to prove I would be able to make mortgage payments in future and still have some left over. I'm more than willing to do this and whatever else it takes to demonstrate I can be trusted - I just don't see the point in waiting til house prices start soaring again, which is what I'd have to do to get anywhere near a proper deposit saved on my own.
To those who say parents would be taking on an unwise investment, the threat of negative equity is only a spectre if you don't intend to stay in your house long and are just in the market to keep selling and moving on. I don't believe in buying a house for this purpose - I believe in staying in it and making it a home.
Those on this forum who accuse young people of being lazy or not knowing how to save have no idea of what it's like to be in your early 20s in this country. Many 20 somethings will have university debts as foisted on them by the Labour government; I have a friend who is £16k in debt solely from student loans, and although she is a qualified teacher, she has only been able to get supply teaching jobs which don't earn enough to allow her to start paying the loans back. In the meantime, the interest piles up. How the hell is she supposed to save up a £12k deposit out of nowhere? I agree that showing some ability to be financially disciplined and save up is no bad thing. But in the current climate, we are all feeling the pinch, and those of us at the bottom of the pile need the most help. We are discriminated against for decent jobs ('not enough experience' 'too qualified' 'older staff won't like having a younger person in a more senior position to them'), given dire salaries or told the only way to up our employability is to embark on unpaid internships (WHO can afford to work unpaid?), expected to foot the bill for everyone in this country who could work but refuses to, and forced to rent from amoral landlords. Oh, and did I mention we're constantly reminded there will be no state pension for us when we got old? And don't even get me started on my £200 NHS dentist bill a couple of months ago.

Try living for a few months on my salary, see how much you would actually be able save - if anything - work out how long it would take you to save up a deposit, and then shut the hell up about young people not knowing how to budget.

You have no one, but yourself to blame if you are 24 and only earning £16,500 a year.
I turned 24, 2 weeks ago and I earn £29,600pa which will increase next year. I went to uni and got a degree.
My hubby is 28 and earns £37,000 as a Welder. We own a £240.000 2 bed semi in London/Essex. Most of my friends own their own places and earn above £25,000.
To top it off I have a 6 year old child. I'm guessing your single with no children! Blame yourself for your under achievement. Why should your parents support you at 24 because you didn't study for a good job? Think of how much it has cost them to raise you. I want my parents to be able to enjoy their money, and live life to the full. They have already provided for me in the best way they could. I have student loans totaling over £15,000, but what people fail to mention is it only cost around £17 a week in repayments. Go to uni, get a degree and you too can earn a good wage, sky's the limit. Allow your parents to enjoy their savings. Find your own way forward.