Money Moral Dilemma: Should I pay my parents interest?

Pollycat

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!!

Not a very clever idea if they may want to borrow money from the parents in a few years time. :cool:

What if the parents had told the child to get an extra job and not to sponge off them when he/she approached them for the £7k loan?

That 'dream home' might have remained just a dream.....

Pollycat

happyinflorida wrote: »

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.

Looking at it the other way, lilychapman could be accused by her other child of treating the child she is loaning money to more favourably.

Should the child who has bought his/her own house without any help from lilychapman be disadvantaged in their mother's will?

It sounds to me like lilychapman is trying to readdress the balance between her 2 children.

emh_2

I can't believe how many people are quick to judge the parents and not the children.


What lesson are we teaching our children about money otherwise? it doesn't grow on trees and doesn't come for free.


My parents could never afford to lend me anything, so I had to study hard, save every penny and wait until I could afford a 'non' dream home and work up from there. I'm very careful with money and have done well. On the other hand, I have friends in their forty's that still expect hand outs from their parents as they have never learned to live within their means.

relaxtwotribes

happyinflorida wrote: »

this could well mean they end up having to sell their home to pay the estate back.

Only if this child has been disinherited. Not a likely scenario having helped to buy the house in the first place.
Lilychapman's approach is the correct one.

tgroom57

You say they didn't say anything about paying interest on the money. Well, they also didn't say anything about how long you were to continue paying the £60 either.

happyinflorida

relaxtwotribes wrote: »

Only if this child has been disinherited. Not a likely scenario having helped to buy the house in the first place.
Lilychapman's approach is the correct one.

Supposing there isn't enough money in the estate to pay off the loan to them first - but when estates are drawn up the people have to pay the monies due first in order to get their inheritance, don't they?

happyinflorida

MSE_Nick wrote: »

This week's MoneySaver who wants advice asks...

Some years ago my parents lent us £7,000 towards our dream house, for which we agreed to pay them £60 a month. We recently sold the house, so I offered them the remainder less the total we'd already paid. Now they're saying they want the full amount back in addition to what we've been paying. They didn't mention interest at the time and that seems a high rate - should I pay?

Hi everyone - this was my question - it hasn't been quoted in full to what I put, but then I am long winded and it's been shortened but I still think it makes sense.

I mainly wanted to see what people would do in these circumstances, it's made interesting reading!

My parents had lived in their dream home - a very large, grand house for many, many years. So our dream house was nothing like theirs and I don't think it was extravagant.

Interesting that so many would put things in writing - I trusted my parents so never would have thought of doing this.

My father died a few years ago and it was only then that I learnt the truth. My parents had been lying to me for many years.

I knew they weren't poor, but they didn't give me their true incomes for pensions - they were actually getting over £2500 per month, no mortgage outgoings for them (they'd originally paid £4000 for their dream house!) so were on an enormous income in comparison to us.

When we sold our house we only made £16000 so to have to pay back my parents £7000 left us with very little for our next deposit for our next house and we desparately needed a new second hand car as ours was on its last legs.

I tried talking with my parents to reduce the amount but they wouldn't have any of it and insisted on the full amount being given to them even though we'd paid them back just over £3000.

Just to rub even more salt in the wound, when they'd lent us the money as a thank you we paid for them both to have a weeks holiday at their favourite farm house in Wales - this cost us £500. We went for a weekend at the beginning of their holiday but didn't stay for the full week as we couldn't afford to do that!

When my dad died, I found a letter from my mum that she'd written to close friends of hers - she always wrote everything out in rough first and then sent a proper letter to the friends (she wouldn't send anything that contained any errors as it had to be perfect!). This was the same year they'd lent us the money and we'd paid for them to have a weeks holiday - she wrote that she would love to go on holiday but unfortunately due to their circumstances they couldn't possibly afford one! No mention of us paying for them to have a lovely holiday in their favourite place!

I knew my dad had received money from being made redundant - he told me he'd got £13000, it turned out it was actually £33000 - so they had a lot more money than I ever knew about.

They told me they were getting the money to lend us from cashing in part of my dads pension - so the £60 a month payment was the amount he was losing, so that's how they told us to pay £60 per month which we paid without fail, even when my husband lost his job - without receiving any redundancy and we got into mortgage arrears - this was the reason we had to sell up.

I see now that my parents were not what they pretended to be. In my mind they were unloving and as for my mum, going to church every sunday and pretending to be a christian, I can tell you I am very unhappy with them.

She's now in a care home and has Alzheimer's - I've done everything I can to ensure she's well looked after but it's been very difficult for me in view of what they did to us and how much they messed our lives up.

They could have easily have given us the money for our mortgage arrears which were less than £1000 but they said they hadn't got it! I feel stupid for believing them but at least I've been decent, unlike them.

TBagpuss

The value of their house or how it compares to yours isn't really relevant, and I'm a bit puzzled about the comments about them lying to you about their income - their income is one of your business, unless you were supporting them financially.

£3,000 interest on £7,000 over 4 1/3 years is pretty high, and I think you would have been justified in challenging the figures, but over all it does read as though you felt you were entitled to money from them simply because they (at a much later stage in their working lives) were in a better financial position than you.

Your mother's actions about the holiday are not very nice.

onlyroz

The financial situation of your parents is irrelevant. I agree that it's not very fair of them to change the goalposts on you, but this is why you should have got it clear from the start exactly what the terms of this loan were.

Guinea_pig

I lent my daughter money towards buying their first house I would never expect interest on it. Things are hard enough these days to get on the property ladder and keep your head above water. And before you think I have "loads of money" I don't. This trend has gone through generations in our family, my own mother and father borrowed of his parents so this is now the third generation.