Using child’s inheritance to get on property ladder

[Wanttobeontheladder]

We are in our late 30’s with 3 children and have been renting all our adult lives

We are desperate to get on the property ladder but I am SAHP and DH is sole earner.

After the loss of a parent recently there is a considerable inheritance that was left directly between our children rather than coming to us.

Using this money would mean we could finally get on the property ladder (just)

Seeing as the children benefit too we feel that we should use it.

Would we be unreasonable to consider this?

Outrageous you’d even consider

And I’m not exactly the most upstanding person on the planet!

I'm. It sure you would be allowed to do this, it's not your money. Did they specify what they wanted to happen with the money ? Car at 17 ? House deposit?

For the sake of £25,000 I would not do this. It would be less complicated if you only had 1 DC, but you have 3 DC and it's a bit of a minefield.

I'm going to go against the grain and say YANBU to consider this. You have to be fair as it was left to them.

But I can see your pov - the whole family including the children could have their own house to live in, with all the benefits that entails.

Compared to sticking the money in an account for 15 years, earning basically no interest due to current rates, and by the time they can get it out it will be significantly devalued anyway.

I think it's a brilliant idea, the kids are only little and you could save the difference between rent and mortgage to return the money when they are 18.
There's nothing wrong with robbing peter to pay Paul.
not sure of the legal side though.
As long as your kids don't miss out YANBU.

Did they get £25K each? I thought you were talking about a much bigger sum.

I think a mortgage company would not particularly like this scenario, tbh.

With 3 kids and a low income I doubt they would save the difference, though. There's always something that needs to be bought.

What happens when your children are older, will they no longer be first time buyers? It all sounds too complicated for the amount of money.

OK - if you invested this properly, you might get x return on the money.
Investing it in housing might give you the same/better or worse return on the money.

So, if the return is likely to be similar, you could invest it in housing for the kids.

But it would need to be done in such a way that it was an investment with the full amount and the accrued profit repayable on the day the oldest turns 18.

If you can do it that way, then it is no different to investing it in a high interest account (especially as there aren't any high interst accounts around at the moment)

The crunch will be, how are you going to pay back that investment, in 14 years form now (18-4 years, as oldest is 4).
Do you put £300 per month away? Is that enough? You would need to calculate the probably increase in house price over the next 14 years (good luck with trying to work that out) and add that on.

If you can do that (that is save up the 25,000 plus increase due to house price increase) over the next 14 years, and have their investment ready to return to them at that point, then it is no different to putting it in an investment fund.

I would want to see it all drawn up very watertight legally to protect the kids. one way of doing that is to appoint a solicitor to represent the kids, and one to represent you. Doesn't need to be expensive, only like 2 solicitors involved in a house purchase.

Hollow- not £25k total between the 3 DC , it’s a considerable sum to us

I can imagine there could be some jealousy from people who have worked hard to get on the property ladder that if we do it this way we’ve had it easy maybe.

No, this isn't the issue at all. If the money was left to you not a single person would be telling you that you should earn the deposit money yourself rather than use your inheritance. That'd be silly. The issue is that it's not your money to spend.

Please don't use their money. It was left to them. It could be a nice little pot for then when they are old enough to go to college, uni buy a house of their own etc. If you were meant to have it you would have been given it.

Are you going to pay your children market rate rent? invest their money in property now- that's what they would be entitled to , and work out what the mechanics of getting the eldest child their money when they come of age.

But how will you release the money back to your DC when they turn 18?

It’s not just a case of being able to repay the £25k it’s the £25k plus the interest it would gain until they are 18 you would need to repay

Do it and set up junior ISA's for the children and pay the savings into this until you have repaid the 25K.

You will all benefit from this in the long term and you will be able to give them a lump sum when they are old enough.

Take legal advise and document the decision.

I think it would be acceptable to look in to/consider it if you were in a precarious housing situation. I know people say renting isn't secure but your children currently have a home. But it doesn't sound like you are. Just overcrowded down to your own choices. You can go back to work and get a bigger place if you need more space. Don't make your children pay literally for your choices.

There may be a way if it can be legally agreed. The house is bought with the money the parents then pay market rent to the children, which is invested. When the children reach 18 they then have control of the property and investments. If a trust has been set up this might be a solution.

I’m sorry but OP you’ve ignored an important question from another poster - why isn’t your own 45k deposit enough for a property?

And also - what happens if you lose the house and the money? How do you pay your children back then?

I would seriously question whether this is legal.

I used to be a solicitor. this is not legal. Whoever has the money holds it in trust for the beneficiaries. There are rules about how this can be invested and dealt with. if you took it for your own purposes that would be illegal and possibly criminal.

Can't believe the replies. What you suggest seems perfectly reasonable.

The DCs won't need the money and probably can't access it for 14 years so it seems like using the money to provide them with a secure and suitably sized home that costs less than renting is a good way to use it rather than having it sat earning little interest or risking it on the stock market. And the fact that you save £200 pm compared with rent means that you can pay back the money before they are 18 anyway.

I would take legal advice and do it. Interest rates are very unlikely to move significantly over the short to medium term as increasing them would completely fuck the economy. And you can get a 5-10 year fixed rate mortgage anyway to mitigate the risk. And you can work more when DCs are in school and pay back the money faster.

Plus you'll be paying towards your own home instead of throwing away money on rent. What's the point of the money just sitting there for the next 14 years?

Hold on, have I missed something? You have £45k saved, why do you need to take money from your children then???

It would be less complicated if you only had 1 DC, but you have 3 DC and it's a bit of a minefield

I think the fact there are 3 dc makes it a better idea. 25k for 1 person is quite a bit, but 25k/3 is only 8k each. Which is great, but not life changing, especially accounting for the effects of inflation 15 years from now. Is it better to live in a spacious house for your whole childhood OR parents are skint and you share a small room with 2 sibs your whole childhood, but you receive a couple of thousand £ once grown. I know which I'd choose.