Bank of mum and dad mortgages

Flugelhorn

Not sure why it is a problem paying the rent for the offspring? I have the money - they don't.
Reduces IHT liability as is "gifts from excess income" 

Newbie_John

I think the problem is with the average calculation.

If one out of 10 people one gets £300k gift (sale of grandparents property), the other nine gets nothing - the average is £30k.

We should look at median, and that's likely to be few grands max if any.

bluelad1927

justwhat said:

Petriix said:

Ultimately it's a question of how much is actually required to buy a house. The numbers are eye-watering:

Typical house at £300k, £30k deposit, 6% interest on £270k mortgage over 30 years = £1619 per month. To pass affordability on that you'd need an income of at least £54k and maybe as high as £67.5k.

The only way I was able to buy was with a six figure 'loan' which ultimately became a gift when the BOMAD received a large inheritance themselves.

£10k wouldn't even make a dent these days. 

Trouble is 300k is not the bottom of the housing market.  You have to start at the bottom and work up. 
You buy the cheapest house you can find just to get a foot on the ladder. Your first house Is not going to be exactly what you want or the area.  

People seem to  not want to start at the the bottom or move jobs/areas based on affordability.

btw 54k for a joint couple is  do-able for many.

Exactly this!

The average house price in the UK is £285k 

That is likely to be a 3 bed semi suitable for a family of four in many areas.

What makes people think they are entitled to start off at this point.

Sea_Shell

Flugelhorn said:

Not sure why it is a problem paying the rent for the offspring? I have the money - they don't.
Reduces IHT liability as is "gifts from excess income" 

It's a problem* if it's not out of "excess" income, but is actually taking their life savings!!



*Brewing for the future 

dimbo61

Well your Kids may well need help to get on the property  ladder.
With Rents going up in many areas due to mortgage rate increases and other costs to Greedy ! Landlords many young people can't afford to save the 10/15/25% deposit to buy even a first home.
So if you can save, save, save.
Consider offset mortgages
Help your kids open LISA  ISA s 
Work out ways to help them save money each month.
Moneysavingexpert is a good site to start.

Jaco70

Newbie_John said:

I think the problem is with the average calculation.

If one out of 10 people one gets £300k gift (sale of grandparents property), the other nine gets nothing - the average is £30k.

We should look at median, and that's likely to be few grands max if any.

That’s a very good point, which I hadn’t given much thought. We all know people who could buy their kids a 500k house, as they’re so wealthy.

‘Average’ has become a slightly pointless marker in recent years, as ‘median’ anything (net worth, salary etc) is always a far lower figure.

Ksw3

These posts always make me wonder if my situation is/was particularly unique. I was the first to go to university (and first to get more than one GCSE pass) and until very recently was often helping my parents to pay rent. I've never known if this was unusual as it's all I had known. 

I do often think how nice a BOMAD must be. Perhaps it says more about my social circles but I'm the only one to buy a house (without any help although admittedly it was a joint purchase with my partner so two incomes and 10 years of saving).

Jaco70

Ksw3 said:

These posts always make me wonder if my situation is/was particularly unique. I was the first to go to university (and first to get more than one GCSE pass) and until very recently was often helping my parents to pay rent. I've never known if this was unusual as it's all I had known. 

I do often think how nice a BOMAD must be. Perhaps it says more about my social circles but I'm the only one to buy a house (without any help although admittedly it was a joint purchase with my partner so two incomes and 10 years of saving).

It’s quite humbling to think of someone helping their parents (although I’m sure there are many), when I have had plenty of help from mine and although I try never to trouble them for money, I know it’s there as a last resort if my finances went haywire.

Conversely though, the help I’ve had (which included inheriting an ex council flat that my parents had paid for and which my Nan lived in, and gifting a 5% deposit on my first house) makes me feel that helping my kids in a fairly big way is only fair. I think my parents would be disappointed in me if I didn’t help the kids, although I know they wouldn’t say anything. 

murphyslaw2020

I feel if they haven’t got the discipline to save for a deposit by themselves or with a partner, then I would question their ability to pay a mortgage. it might be better to rent. 

Ideally stay with parents until they can get the deposit together. 

Petriix

Growingold said:

We all want to help our children as best we can and there is nothing wrong with that but are we really helping them by stumping up large sums of cash to help them out.

Okay when we bought our own houses prices were considerably less but also were our wages.  A lot of people today receive eye staggering wages and yet they still say they can't afford to pay their mortgage.  Out of these people only a few really can't the others just make wrong choices with their disposable income.  I know when I was saving for the deposit for my first house every penny I could I saved hard.  I went without because in those times that is what people did to realise their dream of property ownership.  I had no BOMAD to help fund my deposit.

By bailing our children out are we really helping them with lifes choices.  In time if we continue to help them financially they will come to expect it whenever things get tough.

I would say never feel guilt tripped into giving your children money and when you do only give what you can comfortably afford.  There is no right or wrong amount.  Don't get into debt just to help them because you feel bound to do so and it seems to be what every parent is doing now and you don't want to feel as if you're letting them down.

  

You're not 'bailing them out'. The housing market is rigged against anyone who doesn't already own. I simply wouldn't have been able to buy without the generational support. In the interim 7 years I would have forked out over £80k in rent, instead I've used that money to pay off most of the mortgage so that I'll be in a position to contribute towards my own children's futures when the time comes rather then scraping around for rent into my retirement. 

Luckily my dad gets a great sense of satisfaction from securing the financial future for his grandchildren and that's what he enjoys spending his money on. I imagine I'll feel the same if I'm living mortgage free when I'm older.

Obviously only give what you can afford. Not everyone has the luxury of being able to help their kids out, but lots of retirees seem to prefer going on cruises.