Brainstorm- Best way to help as a parent

poppysarah

Do you have a huge chunk of money sat around not getting interest at the moment?

You could help them buy a house but need to consider ALL senarios

- they want to move to another part of the country for work
- they split up
- they split up and fight over the kids/house costing ££ in legal fees.
- they fail to keep up payments on the mortgage and lose the house
- they fail to keep up payments on the mortgage and lose the house BUT because house prices have dropped you get ntohign back
- house prices go down and they're stuck in a house they don't like
-house prices go up and they're stuck in a house they don't like
- they want to buy a specific house and you don't like it
- they lurve each other and don't want any legal bits of paper coming in between that.

etc.

DotingDad

poppysarah wrote: »

Do you have a huge chunk of money sat around not getting interest at the moment?

You could help them buy a house but need to consider ALL senarios

- they want to move to another part of the country for work
- they split up
- they split up and fight over the kids/house costing ££ in legal fees.
- they fail to keep up payments on the mortgage and lose the house
- they fail to keep up payments on the mortgage and lose the house BUT because house prices have dropped you get ntohign back
- house prices go down and they're stuck in a house they don't like
-house prices go up and they're stuck in a house they don't like
- they want to buy a specific house and you don't like it
- they lurve each other and don't want any legal bits of paper coming in between that.

etc.

Nobody said life is easy!

I would need to borrow myself to do anything against my own place.

If they need to move for work then they could let the place and that would also be a necessary evil too I guess should they be in negative equity, split up etc.

I think they will make a go of it though. They are delighted about the baby even though it has appeared unannounced as it were!

BitterAndTwisted

You can have an agreement legally drawn up to ensure the loan you are making to them is turned into a charge on the property, so if it ever has to be sold you would get that back either in full if there's enough equity or as a percentage of the purchase-price. However, arrangements of this sort are not attractive to mortgage-lenders and they will decrease any offer they make to the couple by the same amount. Having a deposit provided in this way does not necessarily prove to the lender that a) they can afford the repayments and b) that they have been able to set aside any savings of their own.

Do they have any savings to contribute towards the deposit and costs of purchase?

seven-day-weekend

poppysarah wrote: »

Buying might be a better option if
- house prices were more affordable
- they could save their own deposit.


Renting isn't dead money - and it enables people who can't afford to buy a house to have somewhere to live.

One reason house prices haven't dropped is that the bank of mum and dad have been interfering.

You don't pee money so it seems silly to put yourself in a position where you could be throwing it away.

Helping surely - would you not help your son or daughter if you had the wherewithall?? Interfering indeed!

To the OP, I don't think there is another way other than to be on the mortgage. We have recently been exploring this with our son and that seems to be the only way to have your name on the deeds when there is a mortgage involved.

In the end we made a gift of the deposit to our son and he does not have to pay us back. Only his name will be on the deeds and the mortgage.

Annisele

DotingDad wrote: »

If they need to move for work then they could let the place and that would also be a necessary evil too I guess should they be in negative equity, split up etc.

I wouldn't assume that's the case. Their lender might not give them consent to let, and if they're in negative equity they won't be able to get a buy to let mortgage. If house prices fall sharply, that would mean lots of current tenants go out and buy - making it more difficult for homeowners to let out their properties.

Do they actually want to buy? My parents do want me to buy (they consider rent "dead money"), and have made noises about lending me a deposit. However, my decision not to buy is based more on "taking all of my circumstances into account it isn't sensible to buy" rather than a straight "I can't afford to". Unless you are absolutely sure that they do want to buy, please leave them be!

If they do want to buy, then lending them the deposit might not help as much as you think. They'd have to declare it was a loan (rather than a gift), and most lenders would take that loan into account in some way - possibly reducing the amount they'd lend, and possibly choosing not to lend at all.

poppysarah

DotingDad wrote: »

Nobody said life is easy!

I would need to borrow myself to do anything against my own place.

And that is the biggest reason you shouldn't do it.

ognum

I am of the opinion that you dont gve what you cant afford and once you have given it is no longer yours and you let go and let the recepients do as they wish If I had to borrow to lend my kids a deposit I would not lend Im afraid

lincroft1710

My advice would be "if it's your money......". But it's not your money, you've got to borrow it and repay with interest. Could your "child" and partner afford a mortgage even with 20/25% deposit as they can only presently afford a cheapish rental.

BitterAndTwisted

DotingDad wrote: »

I would need to borrow myself to do anything against my own place.

I did not take this to mean that the OP doesn't have the savings to make this loan, just that should they need to do improvements to their own property they would have to either borrow it or remortgage.

I don't wish to sound completely unsympathetic to a couple I don't know personally but this "surprise" pregnancy sounds like people who aren't good at planning and/or providing for their own futures. To my knowledge, the stork never appears suddenly and unexpectedly in the dead of night.

Are they going to be able to afford mortgage payments when inevitably they are reduced to only one salary for close to a year or maybe longer?

DotingDad

In response to postings since my last for which I thank you all:

I have a moral obligation to do something as I am already helping another child of mine although the circumstances are different.

The other child had a deposit but no mortgage as the banks and building societies "pulled the rug" from the first time buyers' market. We helped by lending the mortgage element and are paid what is payable under a 25 year mortgage at our interest rate.

The subject of the thread has no deposit but has stated a desire to buy as moving from one rented place to another is not what they want.

They both have reasonable salaries for the area they are in so (cross everything!) even on one salary the projected mortgage payments (with a decent deposit courtesy of yours truly) will be less than the rent they pay now.

It therefore makes sense to them and me for them to buy.

In reality I will almost certainly end up gifting part of the deposit to this one as I'm only going to ask the other one to get a mortgage for the remaining capital element meaning I will have "given" her the interest and protection insurance I've paid.

However I'd like to have the option to recoup since, as people have correctly pointed out, nobody knows what lies around the corner.

The suggestion of some sort of agreement that any equity or surplus (up to what I'm owed) once the mortgage company takes their chunk in the event of default maybe the way to go but I'm not sure!