Money Moral Dilemma: Should I pay my parents interest?

donny_jim

I think 2% a yr would be fair, assuming you paid the £60pm without fail every month you borrowed the money for less than 10yrs as you still owed something. it proves the point, whoever you borrow money off, you should have an agreement in writing, stating, how much borrowed, how long to pay back, what if any interest to be added.

19lottie82

If this was coming from anyone else but your parents, it would be called extortion!

Fitzmichael

Like others, I suspect that this is an invention by MSE. If so, whoever did it should be sacked. An ordinary person, really looking for an answer would not write the puzzling 'the remainder plus the total', which we cannot calculate, but the actual amounts, and a financially savvy MSE employee would know, and should give, the necessary info.
Theoretical but realistic 'dilemmas' can be interesting, but we're not objects for other people's fun.

Pixie5740

If someone wants to charge interest on a loan to family or friends then they should make that clear from the start, not move the goal posts several years down the line. I also hope that all those who do charge interest are declaring that income to HMRC and not committing tax evasion.

Yes the OP might have sold the property for more than they bought if for but chances are the next property purchased had also risen in price so it's not as though they made a profit.

I suppose the OP could just pay some interest to keep the peace. How much would depend on what has already been paid. £60 a month would work out at £720 a year in interest so depending on how many years this loan has been rumbling along for that could be a steep interest rate.

blue_angel

How long ago is "some years"? At £720 a year repayment, you might a;ready have paid back nearly the £7000 already in "some years".

We had an agreement with my Father in law when he leant us our deposit for our house. He took out an interest only mortgage on his property to pay our deposit and release some cash for other things. We agreed we'd pay the proportion of the interest only repayment to him, and then repay the capital he'd lent to us at the end of the term of his loan. The Bank of Dad offered us the best interest rate we could get at the time.... and we knew that in X years time, we'd need to find the cash to repay him....

aquarius02

Absolutely no! If your parents wanted to charge interest on the loan, then they should have made this clear in the first place, and had a legal agreement drawn up. It seems to me that they are being unnecessarily mean.

Conned

Unless your parents are really poor, I would say you need a bit of role reversal here. Tell them that if they want to earn money, get a job and don't sponge off you!!

PosterBoy77

19lottie82 wrote: »

If this was coming from anyone else but your parents, it would be called extortion!

Not sure about that, Millions of people borrow on expensive credit cards, use payday loans and buy things from places like brighthouse where the interest rates are very much higher than those being mentioned on this thread.

PosterBoy77

Conned wrote: »

Unless your parents are really poor, I would say you need a bit of role reversal here. Tell them that if they want to earn money, get a job and don't sponge off you!!

Since when is charging some interest sponging? Expecting to borrow money for free is sponging.

happyinflorida

lilychapman wrote: »

I agree that there should have been a clear agreement when the loan was made.
I am facing a similar decision with one child needing significant help to buy a house where the other one has made different life decisions and is now a home owner. The loan is more than I can afford to give so the agreement is they will pay me back with a small amount of interest because I use my savings to live on (but interest rates are very low for savers.)
Should I die before they can repay me then then I want a proportion of their house value taken into account in the estate. This seems fairer to the child I didn't help out in the same way. She could have put that money into her house with less mortgage and increased her investment in the housing market.
So yes! In fairness you should give your parents some interest as they may have a similar predicament.

OMG are you for real?! How dare you suggest that a proportion of their house value be taken into a/c - this could well mean they end up having to sell their home to pay the estate back. Some mother you are.