Money Moral Dilemma: Should I pay my parents interest?

relaxtwotribes

happyinflorida wrote: »

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?

No. Suppose that when someone dies they leave total assets worth £14,000 comprising a loan due from one (of two) child and £7,000 of cash. The will gives half to each child so the one gets the cash and the other gets the loan discharged. No need to sell a house to repay the loan.

happyinflorida

onlyroz wrote: »

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.

The reason I have put my parents financial situation - which I was unaware of at the time due to their lying about it - is because many people have said it is relevant!

My parents - initially said the money would be lent to me for however long I needed, there was no hurry to pay it back and that I only had to repay the money my father was losing from his pension income by taking the £7000 out of his pension. This was totally untrue but I didn't know that. They didn't need the £7000 to be repaid in full after receiving all the money they had from me and I did tell them it would cause us financial difficulty when we came to buy our next house - but they obviously didn't give a toss by what they did.

Interest was not mentioned at any time - I thought I could trust them.

My parents always wanted to know exactly what we were earning, what savings we had if any, they checked and double checked everything - nosy and I didn't want to tell them everything but felt I had to.

Obviously I sincerely regret everything now but didn't know what was really going on.

I just wanted to know what people on here would have done in the same situation.

If I had my time again I wouldn't have paid a penny back.

We even paid for our own wedding and honeymoon!

Arthog

This dilemma only makes sense if the OP has missed a zero off the amount borrowed.

minicooper272

Good to have the additional info! Understandable that you are annoyed, I would be too in your shoes to have the terms changed like this! Also the fact of demanding the full £7k when your selling due to being in dire financial straits, and not for greener pastures!

Their income aside, I think the agreement to repay £60 a month to match the amount they were losing out on means they haven't really been left out of pocket! £3000 interest is an astronomical interest rate too!

Matters are complicated by your mother's alzheimers though, I imagine any discussion on money could be complicated by this, but I think you just have to say "this is how much we would have repaid on a loan, and this is how much we can afford to repay you, like it or lump it", but be prepared for repercussions!

Mojisola

minicooper272 wrote: »

Matters are complicated by your mother's alzheimers though, I imagine any discussion on money could be complicated by this, but I think you just have to say "this is how much we would have repaid on a loan, and this is how much we can afford to repay you, like it or lump it", but be prepared for repercussions!

I think the 'dilemma' is a historical one as the father concerned died some years ago.

gloriouslyhappy

Mojisola wrote: »

If you have plenty of spare money, that's fair enough. Not all parents do.

Apart from the obvious thing that everything should have been put down in writing before the money was handed over so that both sides understood the terms, I wouldn't have accepted a loan from my parents without at least repaying them the interest they were losing.

The loan would still be cheaper for me - why should my parents lose out while doing me a favour?

Even with the full explanation from Happyinflorida, I agree with Mojisola - why should anyone lose out while doing you a favour, the banks would have charged more. Your parents' / ' brother's / child's / friend's money is not yours by right, why should you expect to get it for free? And even if your family has squillions, what about teaching and respecting the value of money, by not giving or expecting handouts?

gloriouslyhappy

happyinflorida wrote: »

Interest was not mentioned at any time - I thought I could trust them.

My parents always wanted to know exactly what we were earning, what savings we had if any, they checked and double checked everything - nosy and I didn't want to tell them everything but felt I had to.

Obviously I sincerely regret everything now but didn't know what was really going on.

I just wanted to know what people on here would have done in the same situation.

If I had my time again I wouldn't have paid a penny back.

We even paid for our own wedding and honeymoon!

If you borrow money, irrespective of the financial situation of the lender, you should expect to repay it. Just because your parents did not see fit to disclose their full financial situation to you - and why should they? - doesn't mean "If I had my time again I wouldn't have paid a penny back" is the right attitude to take. As for paying for your own wedding and honeymoon, it's YOUR wedding and honeymoon, why should anyone else pay? If someone offers, that's a different matter, but the days of parents paying for the wedding is long gone.

happyinflorida

gloriouslyhappy wrote: »

If you borrow money, irrespective of the financial situation of the lender, you should expect to repay it. Just because your parents did not see fit to disclose their full financial situation to you - and why should they? - doesn't mean "If I had my time again I wouldn't have paid a penny back" is the right attitude to take. As for paying for your own wedding and honeymoon, it's YOUR wedding and honeymoon, why should anyone else pay? If someone offers, that's a different matter, but the days of parents paying for the wedding is long gone.

I don't think so. When you are brought up by strict parents who expect you to obey them and have traditional values and respect those as well then it is traditional for the father to pay for his daughter's wedding. My parents lied continously to me and we had to borrow money to pay for our wedding, I even did all the catering myself to save money - we had the reception in our flat - it was not the wedding I'd hoped for but I believed the lies.

We also were helping my parents out at every opportunity we could, we bought them a microwave and a hoover over the years when they told us they couldn't afford these items! I didn't know they were on such an enormous monthly income, more than double what we had coming in - yes I'm furious now that I was so deceived and we went without so much because I had to work every possible hour I could to make ends meet.

Pollycat

happyinflorida wrote: »

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!

Why didn't you just post your question normally instead of sending it to MSE to have information chopped out, making it a bit of a nonsensical 'dilemma'?

We've had 4 + pages of assumptions because what MSE Nick posted lacked lots of relevant information.

Having the full story right from the original post would have made much more interesting reading.

Pixie5740

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.

If your child needs a mortgage then they cannot borrow money for the deposit. You may be asked to sign a document declaring the money is a gift and not a loan by the mortgage lender. Once you gift/loan that money you cannot then stipulate in your will what they will do with their house.

Why do you have to help them buy a place anyway. They have made poorer financial choices than their sibling so the fair thing to do would be to let both children live by their financial decisions. So what if they end up renting for the rest of their lives. That's the financial decision they have made.