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MIL helping with deposit in return for monthly income - does this work?

(39 Posts)
likeaboss Sat 23-Jan-16 10:58:53

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likeaboss Sat 23-Jan-16 11:03:07

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Tiggeryoubastard Sat 23-Jan-16 11:04:08

What if one or both of you lose your jobs? You divorce? You fall out with her? She wants her money back? You would need a watertight contract to protect both yourself and, more so, her. There are so many variables it probably is a non starter.

likeaboss Sat 23-Jan-16 11:09:48

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MardyGrave Sat 23-Jan-16 11:09:48

Would you accept her name being on the deeds/only her son (your husband) owning the home and cutting you out of the asset?

TheCrowFromBelow Sat 23-Jan-16 11:10:13

I appreciate you are looking for a solution for your MIL, but you need to consult a proper FA and a solicitor to explore the legalities of this. Your MIL also should seek FA and solicitor of her own accord.

This sounds very complicated and what happens if (for example) she needs care and requires the lump sum back in order to pay for that?


Plus, when she dies, that money would still be sitting there, gaining value. but it might gain value in her lifetime. Her annuity could go up (or down!) but you are not going to be making her any money.

likeaboss Sat 23-Jan-16 11:13:04

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likeaboss Sat 23-Jan-16 11:17:36

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Careerchanged Sat 23-Jan-16 11:19:35

What if one of you dies or you have an incapacitating illness?

likeaboss Sat 23-Jan-16 11:25:56

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bangbangprettypretty Sat 23-Jan-16 11:29:55

OP I think it's a good idea.

My parents helped us with our mortgage deposit but had to declare to the bank they have no interest in the house and the money is a gift. People on here told me I was grabby etc for accepting money from them, but it worked for our situation.

We drew up a gentleman's agreement between my parents, DH and I stating that the document overrides any previous declaration and that we WILL pay my DPs back at XXX per year. My siblings were all ok with this and if something happened to either parent there is still enough money to help them. It's not legally binding but we just wanted to lay down an agreement for any eventuality - divorce, illness, death, so it was unemotional if ever that time came.

I'd speak to the siblings and get their buy-in, but longterm if your family is like mine, they'd rather you were in a good house rather than the money be frittered away.

It is her money to spend, but it sounds like she is awful at money management so not as though you're preventing her from holidays or cruises, rather that she isn't actually enjoying her money as she'd wish as she is disorganised.

Tiggeryoubastard Sat 23-Jan-16 11:31:17

So you want her money to help you but you don't want her to have any legal protection? Just protection for yourselves with the statement that it's a gift? You're starting to sound very selfish mercenary.

likeaboss Sat 23-Jan-16 11:39:26

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Tiggeryoubastard Sat 23-Jan-16 11:42:25

You come across as feeling entitled to it because you've helped her and she's given things to other people. And the fact you don't want her to have legal protection is very telling. Whatever advice you get on here I guess you'll be going all out to get the money. I hope someone advises her honestly regarding this.

likeaboss Sat 23-Jan-16 11:48:49

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ExasperatedAlmostAlways Sat 23-Jan-16 11:55:41

If you are wanting to help her out so much then why doesn't she just put one of you in conctrol of her finances and have one account that has a monthly amount transferred to it.

All the house stuff sounds overly complicated and to many ifs and buts.

TheCrowFromBelow Sat 23-Jan-16 11:57:37

Personally I think the best way of you helping MIL is to seek the advice of an FA, an a solicitor, and if you can't give your MIL proper legal protection then I don't think this is a good solution.

I know this sounds like a win-win result but unless you have all the proper paperwork your MIL could be left £150K out of pocket. It's a huge sum to gift and lose complete control over. And £900 a month is comfortable but not a huge amount, she still has food, heating, holidays etc.

likeaboss Sat 23-Jan-16 12:04:17

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ceeveebee Sat 23-Jan-16 12:08:14

Does the bank/mortgage company need to know that the money is coming from MIL? Our PILS gave us £10k towards our deposit for first flat but the bank knew nothing about it, PILS just gave a cheque to DH and then it came from our accounts. Similarly we have recently lent money to a friend towards his deposit and the bank knew nothing.
If the bank didn't need to know, then couldn't you just pay back the money to MIL over time as a loan?

LIZS Sat 23-Jan-16 12:15:05

Would you be giving mil a % interest in the property in return? You need to tell your solicitor and bank. Tbh I'm not sure there is any advantage to mil, it seems rather one sided just so you get a house you can't really afford.

AllChangeLife Sat 23-Jan-16 12:15:47

FWIW I don't think you are evil DIL at all - I read her not having a link to the house as her not being able to "lose" or use her money in the house by running up debts against it - ie the whole point of having this money tucked away becomes moot if she can run a debt up of the same amount. You need to look at a way of giving her protection in law but also protecting her against spending all her money if that is what she has asked you to try to achieve.

I think she could possibly register a charge on the property which would give her some link to the house, but limited. Worth exploring, I don't know the ins and outs...

bangbangprettypretty Sat 23-Jan-16 12:27:20

Boss we only bought last year. We just kept it between ourselves and are transparent with my siblings that we'll be paying my parents back - we're doing if annually over five years, with a break this year.

If you are all in favour, I'd go for it - there are lots of variables but historically lots of people keep their money within the family.

MrsFlorrick Sat 23-Jan-16 12:34:55

I think in order for this to be viewed as a loan rather than a gift by Inland Revenue, you would need to pay interest, however minimal on said loan from MIl.

This would help you and help her earn a little on her money as well.

However don't forget you'd have to declare this extra loan to your mortgage lender who may refuse you the mortgage if there is a second charge on the property from day 1.

I think your biggest stumbling block is your mortgage lender as they are unlikely to accept this scenario.

chantico Sat 23-Jan-16 12:35:38

"Does the bank/mortgage company need to know that the money is coming from MIL?"

If it was just a gift from a parent, then yes they need to know, but no it won't make any difference.

But if it is a commitment to a regular outgoing, then yes. Because it means it functions as an additional privately arranged loan.

So the mortgage you are offered may be adjusted because of this additional financial undertaking.

Get proper financial advice.

Because I'm assuming you would not go ahead if the cost/availability of a mortgage for you was negatively affected by the additional obligation.

Auriga Sat 23-Jan-16 12:40:32

It could be complicated and you & she need to be advised independently. The problem with doing it on trust is that relationships can change drastically as a result of mental illness or dementia (as has happened in our family) so any agreement needs to be proof against unpredictable pitfalls.

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