Money Moral Dilemma: Should I pay my parents interest?

[Deleted User]

Hi,

they maybe see how much you have made from their investment in your dream home over the years, and, as already said, maybe not as flush themselves now, so could do with a bit of a boost.

How long has this £7000 been on loan?

brewerdave

I've given my kids money over the years including £ks to help with house deposits, which I don't expect to get back.
HOWEVER, recently I've lent them both money to buy new(er) cars; this was on the understanding that they paid me back including an element of interest about equivalent to what I could get on a long term fixed ISA ie ~ 3% -they were happy with this as it was still considerably cheaper than bank/hp loans with the added advantage that they could delay payments if times got hard:)

[Deleted User]

Relationships are about compromise. You bought a 'dream' house thanks to them. This was some years ago so I'm assuming you made a nice profit. You should have offered some of that profit to your mum and dad since they helped you. You haven't, so they're asking interest. 3-4% would be OK.

My parents lent me £4K for my dream house. I'm paying it back at 3.9% interest which is what they were getting on their locked in savings account which is where they took the money from. They've made a sacrifice for me and I very much appreciate it. I wouldn't dream of just taking the money at their expense. And they are not mean people at all, they've taken in homeless people, clothed refugees, given work to the jobless and are very involved with caring in their community at some cost both financial and otherwise.

My main point is that you profited from their loan. They should share in your good fortune. And they lost out savings interest if they had locked in the money elsewhere so there's a double 'loss' if you like. I'd pay the interest with good grace and take them out for a meal as a thank you for their financial support.

mrsammyp

I think we all have different opinions on whether or not parents should lend their children money and if this should include interest, either way it should have been discussed upfront.

Personally based on the limited information we know, I think that presuming you have made a nice profit on the house which may have not been possible without the £7k loan, it's a small price to pay. Its not like you have repaid the £7k off quickly, but agreed £60 over a ten year period which is very minimal.

gaving7095

As others have said, it depends on so many factors which haven't been explained. How long has the money been borrowed for? How much is left to pay?
I guess your parents really need the money, else they wouldn't ask. You only get one set so help 'em out if you can :-) Don't go into hardship over it. Yes, you've sold the house & presumably "at a profit" - but you've still got to live somewhere.

Peirre

I know it sounds harsh.........
The parents where mugs for lending them money, lending money to friends and family will always cause problems, kids will never learn to stand on their own two feet financially when parents keep giving them money. If the kids want a home or a car, let them save up for it
The bank of mum and dad should end as soon as the offspring have finished education & leave home. The only possibly exception is possibly when parents offer to pay for their offsprings wedding/honeymoon.

[Deleted User]

VfM4meplse wrote: »

This I find more than a touch vindictive, and am surprised it's come from you Ringo!

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.

Yes, well this is a stupid, speculative pointless thread, so my old adage is "Ask a stupid question, get a stupid answer"

If you're going to lend family money, you should set some terms before hand. If there is an interest rate, it should be agreed upon. Children should not be there to make a profit from, so the rate shouldn't be above a reasonable amount that might be earned if the money was in the bank.

Also, children shouldn't expect something for nothing - but no one should expect a major change in a financial agreement.

supergramp_2

Fairness is the buzzword here. If you couldn't manage on your own and the help was the answer to that then you need to be fair to the parents. The money they lent you has accrued interest so pass some back. You know it's the right thing to do.

enthusiasticsaver

That sounds a little high but I am not sure even if this is real. We have personally gifted to our daughters (similar amounts but at different times according to need) and don't even expect repayment yet alone interest. However it depends on circumstances and if the parents were relying on the mone back with interest. I would never borrow or lend to family or friends. Would rather use 0% finance or credit card. Now our girls are both set up in their own homes we leave them to sort their own finances only helping if we happy and can afford to gift them.

Pollycat

VfM4meplse wrote: »

This I find more than a touch vindictive, and am surprised it's come from you Ringo!

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.

As with all these fictional MSE dilemmas........

I wish MSE would put more thought into these dilemmas.
As it is, the lack of information just throws up questions.

Don't we have enough real-life dilemmas posted every day on the Marriages board?
At least on most of those threads, the OP does come back to give additional clarification.