Money Moral Dilemma: Should I lend £20,000 to my in-debt in-laws and risk not getting it back?

Emmia

If I was the MMD subject (and depending on timescales for their own purchase) I'd consider putting all the money into a fixed term savings product, locking it up for 12, 24 months etc. The money then isn't available to lend/gift.

SWGranny

As you say you are living in one of their properties, but would like to buy your own, I would use your money for your own house purchase, thereby leaving the property you are currently living in free for them to sell to cover their debts.

primrose_penguin

I see you say you are covering the mortgage in the house they own but you currently live in, why don't you purchase that house yourself as you want to own your own home, that would then give them some cash without you lending it to them, if you do not wish to buy it then look for your own house. They can then sell all three properties which will surely clear their debts and leave them something. I would most definitely not lend them £20,000 they sound most irresponsible and you will probably neve see it again, which will cause a rift between you and your wife. If your father in law had a well paid job and they were in a position to buy 3 properties what have they done with all that money, were all the properties rented out or did they bite off more than they could chew in purchasing them? Whatever the answer do not give them any money they need to accept responsibility for their actions, and there is help out there to sort out their situation if they seek it.

JanPar7

No way - you would do well to disentangle yourself financially by moving out of their property as soon as buying your own place becomes viable. They can then either sell that property or rent it out to receive an income.
Whilst it is sad that your father in law is experiencing burn-out, it looks like he/they made an unwise choice to mortgage themselves up to the hilt on 3 properties with no backup plan, so they may have to accept bankruptcy. It is their responsibility to seek advice on what their options are. Even if you were to jeopardise your future as a couple by giving them the money it doesn't look like your hard earned £20,000 will be enough to bail them out.
Is it the in-laws who have asked you for the money, or has your wife suggested you give it to them?
Maybe you could offer to pay the market rent for the house you are in, if that would be more than the mortgage you currently cover for them. (subject to having a proper rental agreement written up by an agent). Or could you get a mortgage yourself to buy them out of the house you live in? 

Dizzycap

@ MSE_Kelvin - Personally, I wouldn't. I'd invest it in your own property as it's your inheritance and once you move out, they can sell the property you're living in and close out their debts. However, if you decide to loan them the money , make sure you have a written agreement for the temporary loan along with the annual interest of 6-7% PA. It's only fair as you've been paying off their mortgage for the property you're presently living in and you really can't be held responsible for your in-laws life choices and mounting debt - Tough love 

Admiral_Barbarossa

The answer is no and if the current wife doesn’t like it, she becomes the ex!

Simon_the_saver_2

Absolutely not. So far everyone's assumed the parents-in-law have equity in their 3 properties, which may not be the case. Tough love solution is to buy the property you're living in for market value, assuming you can get a large enough mortgage yourselves. If you can afford it and want to be generous, offer to buy it for the outstanding mortgage on it, if that's more than its value. Of course, being able to afford the current payments is not the same as being able to borrow that amount, so could you buy a share of it as tenants-in-common, by borrowing as much as you can and making your t-i-c share that proportion of the outstanding mortgage? Would need a formal agreement that your share increases as their mortgage is a paid off as 'rent'

twopenny

No. Offer them a lift to anywhere they need to go to sort out their problems, selling their house for a decent price anything to help but not money.
Presumably you are paying the mortgage but don't have the reward of the house when done. Offer to buy the house you are in. Give a financial hand that way but maintaining your finances 

ImReallyAnElf

Don't do it. 

A relative of mine lent £40k to his wife's daughter so that the daughter could expand her business - reluctantly, and only becausehe didn't want to upset his wife - and as that business went bust, he'll never see a penny of it back. I'm told that the whole issue became very upsetting for all involved, and I worry that you'd begin to resent your wife as well as her parents if they let you down.

Sidneyroughdiamond

Hello Kelvin. Your dilemma is certainly a tricky one and I see you have received very constructive comments so far. My thoughts are as follows:
- even though you have been covering the cost of the mortgage repayments on the property you and your wife are living in, if that amount is below the normal rental value for your area, you might consider giving your parents-in-law whatever the difference equates to for the time you have lived there (unless it is over the £20k).
- in your shoes I would also consider what the person who has bequeathed the inheritance might have thought of you loaning/giving away the money to other people.  If there is a chance of them “turning in their grave” then think very carefully.
- it is pretty awful seeing people in financial distress and your wife clearly feels that you both should do something to help. Extra expense, but it might be worth gaining the advice of a legal profession.  

I hope it works out well for you all.