Brainstorm- Best way to help as a parent

BugglyB

In the spirit of brainstorming:

Would you want to borrow against your house to just give them £25k (for example amount of money)?

If not why not?

Is it
- you wouldnt trust them with the money?
- you want (need?) to get your money back at some point?
- it just doesnt seem like as helpful a thing to?

If its either of the first two, then you need to think carefully about trying to 'protect it' in a property - it simply is not possible to protect it in all possible scenarios.

Also I think you ought to consider how this might affect your relationship with your son and his partner. If you invest the money in them and then something goes wrong. It is possible - I've seen it happen with friends of mine.

Have you talked to them about how best you can help?

I hope you take this in the spirit its intended which is brainstorming and helping you mull through what is a big commitment

propertyman

Have you looked as shared ownership in their area;
http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_4001347

You/wife and they provide the part equity, and they pay the part rent element, increasing the amount as they go.

If you ( or they) feel that their partnership is a work in progress then perhaps another year in rented might be a good thing for them.

DotingDad

BugglyB wrote: »

In the spirit of brainstorming:

Would you want to borrow against your house to just give them £25k (for example amount of money)?

If not why not?

Is it
- you wouldnt trust them with the money?
- you want (need?) to get your money back at some point?
- it just doesnt seem like as helpful a thing to?

If its either of the first two, then you need to think carefully about trying to 'protect it' in a property - it simply is not possible to protect it in all possible scenarios.

Also I think you ought to consider how this might affect your relationship with your son and his partner. If you invest the money in them and then something goes wrong. It is possible - I've seen it happen with friends of mine.

Have you talked to them about how best you can help?

I hope you take this in the spirit its intended which is brainstorming and helping you mull through what is a big commitment

I'd happily give my children anything.

That's the problem though. What I do for one I have to do for all and I cannot afford to "give" the whole of a 25%ish deposit to all of them.

That's why it would to start out at least as a loan until my other child I'm presently helping sorts a mortgage out (hopefully within the next year) and I can quantify exactly what I've given that one and use that as the figure to give the others in one form or other depending on their circumstances at the time.

DotingDad

propertyman wrote: »

Have you looked as shared ownership in their area;
http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_4001347

You/wife and they provide the part equity, and they pay the part rent element, increasing the amount as they go.

If you ( or they) feel that their partnership is a work in progress then perhaps another year in rented might be a good thing for them.

It was the principle of shared ownership that encouraged me to come up with my idea in that the "rent" element would be paid to me.

We know someone who has caught a bad cold via "proper" shared ownership so would not choose that route.

BugglyB

DotingDad wrote: »

I'd happily give my children anything.

That's the problem though. What I do for one I have to do for all and I cannot afford to "give" the whole of a 25%ish deposit to all of them.

That's why it would to start out at least as a loan until my other child I'm presently helping sorts a mortgage out (hopefully within the next year) and I can quantify exactly what I've given that one and use that as the figure to give the others in one form or other depending on their circumstances at the time.

If you are relying on money coming back from this loan in order to fund your support to your other children that puts even more pressure on it all 'working out' ie you getting some/all of your money back.

One of a million things could happen that have nothing to do with your sons intention to pay the money back that could devalue the property or make it so you lose your investment, this is how I see it anyway. There is no failsafe guarantee.

My other feeling is, in order to properly support your son through this time in his life you need to have some sort of arms length from him. If they own a house it needs to be theirs to make their own mistakes in, if they accidentally bust a water pipe while hanging a painting and flood the whole downstairs, are they going to feel that they are ruining your investment?

Will it add to their stress of any problems with the house? I'm not saying you will be nasty about it - you sound like a really caring person - but it may the feeling they will have.

Will you be on the end of the phone saying 'oh that sounds awful, you poor things, come to ours for a break if you need to' but inside feeling 'oh crap my money - I needed that!'

Again I'm not telling you what to do but just batting ideas around - I'd bet I'm around the same age as your son so can see it from both sides.

For what its worth - ignore the 'bank of mum and dad' brigade. Just figure out what will be best in the long run for all of you.

DotingDad

BugglyB wrote: »

If you are relying on money coming back from this loan in order to fund your support to your other children that puts even more pressure on it all 'working out' ie you getting some/all of your money back.

One of a million things could happen that have nothing to do with your sons intention to pay the money back that could devalue the property or make it so you lose your investment, this is how I see it anyway. There is no failsafe guarantee.

My other feeling is, in order to properly support your son through this time in his life you need to have some sort of arms length from him. If they own a house it needs to be theirs to make their own mistakes in, if they accidentally bust a water pipe while hanging a painting and flood the whole downstairs, are they going to feel that they are ruining your investment?

Will it add to their stress of any problems with the house? I'm not saying you will be nasty about it - you sound like a really caring person - but it may the feeling they will have.

Will you be on the end of the phone saying 'oh that sounds awful, you poor things, come to ours for a break if you need to' but inside feeling 'oh crap my money - I needed that!'

Again I'm not telling you what to do but just batting ideas around - I'd bet I'm around the same age as your son so can see it from both sides.

For what its worth - ignore the 'bank of mum and dad' brigade. Just figure out what will be best in the long run for all of you.

The fact that I want it to be "theirs" as far as possible is another reason for wanting to do it as a loan initially on a shared ownership type model even if, in reality, I end up giving them some of it.

What I want to achieve is some kind of arrangement that enables my contribution to allow them to get a mortgage at a sensible interest rate which would also enable them to repay me until such time as I say "enough."

Until that point is reached I'd like some security though if only to protect the interests of other family members (wife and other children) who have a stake in my financial well being too.

I realise all investments (if that's the right word for this) have risk so I'm trying also to minimise it as far as I can.

ognum

I commend your sentiments and your desire to help your kids but actually it sounds like you just dont have enough money to help them all equally Life is not like a 'sausage machine' that sends out equal needs Some of your kids might need more help than others Some may need it earlier or later in life Do you really have the kind of kids that demand equality whether they need it or not? You can only do your best with the resources you have and with the need at the time No guilt /no pressure/help where you can!

firsttimetom

seven-day-weekend wrote: »

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

No, it is interfering (although with good intentions).

The problem is that house prices have rocketed beyond the reach of first time buyers - "the rug HAS NOT been pulled" as someone said, banks simply require a deposit again. A deposit has always been required, the crazy 95%, and 100%+ mortgages were just a crazy blip.

SO now the only way for FTBs to afford a home is for mum and dad to give them a deposit. Most parents do not have the cash sitting around but have large amounts of equity, so they remortgage and give it to their kids, so they can buy an overpriced house with a large mortgage.

So now both the parents and the offspring are paying thousands of pounds in mortgage interest to the banks. If parents stopped intefering and just let the market return to sensible levels, their children could afford a house and everyone would be better off because you wouldn't be paying all the extra interest. People like high house prices because it makes them feel well off, but it is in fact the opposite - the higher house prices go, the poorer we get.

In reality, although you may think you are being helpful, giving your kids a deposit will make you worse off, them worse off and the only winners will ultimately be the banks.

sugarwalsh

My parents did this for me on my first house. It was the best thing they ever did and in the end they had to buy my ex husband out too. Whilst I was on my own they helped if I needed it and when I met mu OH and they knew it was serious they asked for their investment back. They worked out the percentage of the loan when they had first lent it to me and then asked for the same percentage back. In their case out well for them too. We remortgaged and now the house is all ours, (Well apart from the mortgage!)

The main difference was they had the money and never had to borrow. I do think if I had been in real dire straits they would have borrowed if necessary. However, I don't think your family are in such a bad situation. They could ove to another rented house, or even move into your house(!) to help them save a deposit.

I disagree with the whole 'anti bank of mum and dad' brigade. Being a parent myself I know I would do anything for my kids. And to assume they are not 'responsible' because they are unexpectedly expecting a child is crazy. These things happen to even the most sensible of people.

I wish your child luck with their future as a parent, it is the most precious thing.

Megan

seven-day-weekend

firsttimetom wrote: »

No, it is interfering (although with good intentions).

The problem is that house prices have rocketed beyond the reach of first time buyers - "the rug HAS NOT been pulled" as someone said, banks simply require a deposit again. A deposit has always been required, the crazy 95%, and 100%+ mortgages were just a crazy blip.

SO now the only way for FTBs to afford a home is for mum and dad to give them a deposit. Most parents do not have the cash sitting around but have large amounts of equity, so they remortgage and give it to their kids, so they can buy an overpriced house with a large mortgage.

So now both the parents and the offspring are paying thousands of pounds in mortgage interest to the banks. If parents stopped intefering and just let the market return to sensible levels, their children could afford a house and everyone would be better off because you wouldn't be paying all the extra interest. People like high house prices because it makes them feel well off, but it is in fact the opposite - the higher house prices go, the poorer we get.

In reality, although you may think you are being helpful, giving your kids a deposit will make you worse off, them worse off and the only winners will ultimately be the banks.

The flat my son is buying is £65k. We have given him the deposit. I don't think we could have got much cheaper!

Anyway, none of us wanted him to pay out rent when the mortgage repayment was cheaper by nearly half. What a waste of money when with our help he could buy, at a more affordable cost than renting.