To think that buying PIL's a house would not be a good investment

[Plateofcrumbs]

Before I start want to say I am genuinely canvassing opinion here - have framed as an AIBU but am open to people's thoughts.

PIL's have been considering moving house for some time to somewhere that would be more suited to their later years - they currently live in a fairly remote cottage which needs work.

A house has become available next door to BIL and an idea has been floated that this could be suitable for them. It is way out of the range of what PILs could afford themselves so would involve a 3-way split between PILs/BIL family/ourselves.

We have enough money saved that we could buy 1/3rd of the house from about half our savings. DH was able to save a good chunk of money in a period that he had a lucrative contract and we were living well within our means. Since then we have moved house, doubled our mortgage and I am about to go on maternity leave with our first child. DH is still paid well but finds his job very stressful.

Buying the house for PILs is being pitched as a "good investment". I am happy in principle to help PILs financially but AIBU to see this as potentially a very risky "investment"?

No, don't do it.

It's got potential disaster written all over it.

Are the houses joined? It's a short step to it being one big house for bil eventually and you getting nothing back.

In fact, if BIL is not as (currently) comfortable as you and DH are, where is he going to find a lump sum - let's call it £50-100k - to tie up for umpty years in a house which is not his own?

Although we are (currently) financially secure there are so many ways we could use the savings. Buying a family-sized home in a 'better' area (if we get hung up on school catchments etc) could easily sink the entire pot. DH would like to extend our current home. I am very keen we have enough to provide security if DH were to lose or leave his job. I have been told we were very lucky to get pregnant this time round but if we want any more children we may need fertility treatment.

cozietoesie - I was wondering this too. I'm sure they'd need a mortgage on it, I don't think they have that kind of money kicking around.

There you go then. You may need the ready money.

I would be asking your DH some very hard questions about the sources of funds for this - if nothing else. I'm sure you wouldn't be hornswoggled into putting up the whole investment but brothers can be a funny relationship ('If you put up the money for me, Bro, I'll pay you back' - 'OK, No problem, Bro') and then you're capsized.

It's definitely not a good investment and it has recipe for disaster written all over it.

If the PILs are going to be beside BIL presumably this means that BIL will be more involved in the work and maintenance on the property. Will he then feel that he owns more of the property than DH? Will DH and yourself be expected to help with the repairs and maintenance ( my guess is yes). What happens if you need some of the money?

I think your idea of offering a smaller chunk as a gift is much more sensible. Effectively with what's being proposed you would be unlikely to see any of your money again until such times as IL's pass away, which hopefully will not be for a very long time indeed.

Sorry - x post. Be ultra careful. (And check that you still have the savings in the bank.)

Can you afford to invest your money for up to 30 years with no return?

That's one hell of a long tie-in period, and the 'withdrawal penalty' would presumably, in this case, be family meltdown.

Nope, I'd rather stick it in (a) my mortgage; (b) an ISA; (c) under the bed...

I'm with those who think getting into any financial arrangements with ILs is fraught with potential disaster, even more so when it's something as emotive/complicated/expensive as property. And especially if you and DH are perceived as being 'better off' than the others.

If this house wasn't next door to the BIL/SIL would they all be so keen?

I'd actually be withdrawing at least half of the savings from its current pot and stashing it somewhere else. But that's just me - and I'm a suspicious cove.

There's more to care than just living next door, if professional care is needed the doctors can refuse to release you until you have either a place in a home or paid carers going in so it's a moot point really.

I'd consider it if:

• it's a reasonable price
• it's in an area which is unlikely to lose value, all other considerations (ie interest rates) set aside
• it is in good nick, and doesn't need more money thrown at it
• you have proper legal documents drawn up making it clear you own a third, and your name is on the deeds.

This sounds very mercenary of me, but I say it as someone who looked after my own mum until she died: if they are living next to BIL, then it seems very likely that BIL and SIL (if there is a SIL) will be the ones shouldering most of the work of caring for them as they get more frail. This may see this either as an advantage (if you don't want to do it) or a disadvantage (if you know you will be expected to do it, and want them to move nearer to you, not BIL).

Apart from the obvious disadvantages mentioned by others, it just doesn't seem that the house next to BIL is right for them. They don't need a three bed house with a big garden but a bungalow or ground floor flat or sheltered housing, all of which would also be cheaper.

I wouldn't do it in your situation and I hope that your DH will agree with you.

Good luck.

Offset mortgage for you, was the obvious thing that occurs to me.

We did that because, like you, we wanted to get the most out of our savings, but while still being able to access the lump sum if we wanted/needed to without having to go through any approval process. We paid down our mortgage very quickly this way (pre-child!).

I seem to recall some banks suggesting that parents could support their children getting onto the property ladder using the same idea - so you give your PILs the benefit of your lump sum while you don't need it, but it is still yours if you do need it. This could be a better option than your straightforward gifting of a smaller amount.

The idea on the table is a poor one for all the reasons already discussed :)

I think that I would object to the plan on the basis that a 2 story property is not the right retirement home for them. My parents are fairly fit, but made a point of moving to a ground floor flat not long after their 60th birthdays.

Focusing on the money, investment potential, etc., will lead to too much tension.

I'd say that this time, when you are just embarking on parenthood, is the very worst time for you to know how you want to 'invest' your money. Children can be very, very expensive, and you are either going to lose most of a salary or pay it out in childcare.

IsitmeOr - there don't seem to be as many offset mortgages on the market at the moment. We have a very low mortgage rate so as long as rates remain low this isn't too much of a concern for us, we might consider it if rates increase.

I don't think the kind of arrangement that works for parents helping their kids would work in reverse as it relies on the kids being able to secure a mortgage - no bank is going to offer a mortgage to a couple in their 70s, and they would have no means of making the repayments even if they did.

I suggest that you look at possibility of overpaying the mortgage instead, then. The long term savings are incredible, one of the best investments you can ever make.

Plateofcrumbs, you've not actually said why DH/BIL consider this "a good investment", unless you mean the hoped-for increase in value over the years? Bear in mind that when it comes to selling, properties lived in by seniors aren't always the most desirable - unless they've been maintained constantly, which begs the question of whether PILs would accept the disruption of work being done, or whether they'd just want to be "left in peace" with the property crumbling around them, as some older folk do?

You also said they'd never consider a larger property except that BIL lives next door, which sounds as if they expect a lot of help from him. So will he expect a greater share later, especially as you've said you're more comfortably off? And what about personal care, both in the home and for things like transport to increasing medical appointments? Will that be down to BIL too, and if so how would he view the inheritance in view of his costs? Might he brush the question aside now because they want your contribution, then become more assertive when the costs start to mount up?

Like others I'd personally avoid this like the plague - at least unless careful legal advice was taken and everything fully agreed in writing ... and even then you're stuffed if someone just conveniently ignores it later. As I'm sure you'll have gathered, a lot of this comes from bitter experience ... !!

I think it's a really lovely idea but it needs more research. You could still help them move but not to a house that's too big for them. It sounds like good sense for them to move closer to family as they get older and need more help. And lovely for you and BIL's family to have them closer too, especially with your new baby on the way.

Property does seem to tend to be a good investment, it's true.

What is this obsession of people of a certain generation, for three bedrooms and a garden? A friend's mother was recently moving, and was very hung up on having a 3-bed bungalow (with garden, of course), even though (a) in this town all the oldies want them, and so they are very expensive, and (b) both her grown-up children live in this town, so there's little excuse for one spare room, let alone two... (and the same goes for your PIL if living next to your BIL : a 3-bed is a waste of money, not an investment at all!)

As I mentioned, there are a lot of elderly people in this town, and DH and I saw some real frights when house-hunting through "family-sized" houses under-occupied and too-long occupied by one or two elderly people. A house with a garden is expensive in time, labour and money. We haven't even moved into our new house yet, and I'm already desperate for the DC to grow up so we can move out again!

puzzled yes I assume they are thinking about increase in value.

Think