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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

to ask if you can afford to help your kids buy a home, why wouldn't you?

80 replies

HouseWars · 16/05/2018 12:14

Ok I'm after a range of opinions, a bit of a discussion really.

We are planning to take a chunk of money out of our own home when our children are 21 to put down as a deposit on a house for them... BUT

The house will be in our name and they will pay us 'rent' which will only be enough to cover the mortgage.
Once they have paid enough rent to have repaid the deposit, we will sell the house to them and give them all the money they gave us in rent to use as a deposit for their own mortgage.

So we aren't technically giving them anything, we aren't gaining or losing anything but it will help our children onto the property ladder.

We want to do this as we haven't got onto the property ladder until our mid 30's and spent nearly £50,000 over 10 years in rent which could have been saved for ourselves in a property and found it increasingly frustrating to lose money and not be able to decorate or have the pets we want.

Trust me, I know not everyone is able to afford to help their kids out with big money things like a house and I'm not trying to cause an argument, I'm asking more - if you CAN afford to then why wouldn't you?

OP posts:
baylisbaylis · 16/05/2018 12:30

Buy the house in DC's name to begin with and you won't lose money in taxes by selling it to them. They can still pay you rent.
Downside is the mortgage deal you get might not be as good.

maras2 · 16/05/2018 12:30

Are your kids still quite young, OP?

Original poster
HouseWars · 16/05/2018 12:31

Furano - we thought about doing it that way so that we aren't technically giving them a hand out / making it easy / not giving them any responsibility.
They would have complete control over picking the house and the area.

The mortgage would also be in child's name alone and when they got a partner, they would be expected to put the same amount in themselves or the mortgage written as a higher % owned to my child and then pay it together.

OP posts:
thetriangleisarealinstrument · 16/05/2018 12:34

This does make me a bit sad because I would certainly prioritise helping my children out with deposits for housing.
Maybe its a generation thing? I think it used to be easier to get a mortgage. I dont know anyone now days who has a mortgage without any family help towards a large deposit.

My parents are/were pretty wealthy. They now live abroad have two homes, one with a swimming pool.

I live in a rental property.
Even when they inherited money from their parents deaths they did not offer to contribute to helping me build a deposit.
I do get a bit hurt about it sometimes but I guess its their money isnt it? Their priorities over what they want to spend money on are their own.
It does confuse me because I wonder whats going to happen to them when they cant care for themselves any more? I am their only child and they have chosen to live so far away.... and I certainly dont have the resources to help them in any way. They wouldnt be able to come and live with me in my rental and I wouldnt be able to get over there.

Its important to me and hopefully even if I never end up owning a home myself I will still be able to help my children out when it comes time to buy theirs.

I do think its odd to have kids and then be so underinvested in their futures.

Longtalljosie · 16/05/2018 12:42

But what if their putative future partner didn’t have enough to match their deposit? Lend them the money for a deposit, with a payment plan to repay. You’re planning on more control than one should have on adult children, in my view...

snewname · 16/05/2018 12:50

Although it technically needs to be a "gift", I'd draw up a proper loan agreement but just not disclose it.

snewname · 16/05/2018 12:51

Although we will just give them the deposit tbh but I hope they will protect themselves on the new partner front, but it will be advice rather than a demand.

FuzzyCustard · 16/05/2018 12:53

My children are considerably better off than me.

sundaymorningatwork · 16/05/2018 12:55

Also, you need to pay income tax on the rent received... Now you can't even offset the mortgage interest.

I think its more common just to loan them the money for the deposit. Issue I guess is that a mortgage company will take any repayment obligations into account when determining affordability...

NerrSnerr · 16/05/2018 13:04

I would help my children out if I could but I would wait until older than 21. I don't know many 21 year olds who know what town/ city (or even country) they want to settle (or where the jobs are).

LanaorAna2 · 16/05/2018 13:15

Sadly, I do know people who chose not to help their children, although not many of them - practically everyone does, as estate agents confirm. There is a price to pay for being mean.

One couple I know had tremendous fun in their large London house in their 60s and 70s, while the married DD struggled to bring up their grandchildren in a tiny rental and the single DD got attacked by her druggie neighbours in her rented bedsit. The married DD emigrated to the far side of Europe. The single DD's health went, not least because she was in unfit accommodation.

Now 80, the house is too big for them to cope with and they can't manage the stairs. They don't see the grandchildren more than once a year, and have no family support. DD1 abroad, DD2 sick. They didn't downsize, so the next step is the care home - years earlier than their friends who sold up.

Ironically, the care home will be ten times the price that deposits for the children would have been. Their house will be signed over to the council, so they'll lose that instantly. A big price to pay for meanness, and a bigger cost.

LightAsTheBreeze · 16/05/2018 13:20

DS wouldn’t have wanted to buy a house at 21 and I don’t think he was too keen on us giving him money anyway and has already said so and that we should enjoy our own money. As it is he inherited a small sum of money recently from his DGM which will go a good way towards a deposit so this won’t arise now anyway, I do think that you can give too much and get too involved in it all.

BestZebbie · 16/05/2018 13:23

Ummm... If you pay the deposit from your own money, then they repay you that amount, and then you give them that amount back to be their own deposit, you are still going to be down the deposit amount from your own money. Given that, why not just give it to them straight off?

Also, you suggest multiple DC, aged over 21 - do they actually want to live together in a house of your choice, what if they get married, what if they need to move for work or study, what if they don't want to buy that particular house in a few years but some other one?

busyboysmum · 16/05/2018 13:27

My way would be to loan them the deposit as a second legal charge.

Have they got a Help to Buy ISA? Because whatever they put in that now the government will double up to a certain limit. So makes sense to get them one of those now each.

Then they should buy the house in their own name, no stamp duty payable as FTBs.

You could loan them the deposit and secure it over the property by way of a second charge.

busyboysmum · 16/05/2018 13:29

Also - you can't mortgage a property you don't own. So if your names are on the title deeds, your names have to be on the mortgage. You would get a less favourable mortgage rate as you already own one property.

DBoo · 16/05/2018 13:33

Interesting read. I'm on the other end. Dp and i are early 30s. Can comfortably afford a mortgage (we rent) but massiveky struggle to get a deposit together. I am also on a dmp and dps credit rating isnt great. We basically have no chance for at least the next 6 years.

Parents live in a home that was given to them so no mortgage afaik. We are hoping that there may be some way they can purchase a house for us to rent / effectively buy back from them when our credit improves. I didn't even think of any implications.

Original poster
HouseWars · 16/05/2018 13:36

We have two kids under 16 but there is a 5 year gap between them so we were anticipating the first getting their house and then having repaid in the 5 years before we buy our second child their own house... not one for them to live in together. 😁

Yes there are some really good points in this thread - perhaps we need to have a good think and consult with a mortgage advisor!

OP posts:
InDubiousBattle · 16/05/2018 13:40

I don't understand how it isn't a hand out. If you're 'taking money out' of your home then surely you will have increased (second?) mortgage costs to cover the deposit? They pay you rent which will presumably cover your loan plus the mortgage on the new house. Or are you going to sel, your house and give them the deposit out of the proceeds. Sorry op but your op doesn't really make it clear how it will work?

Even with the logistics, tax, duties etc sorted your offer would smack of too many strings to me. What if you hate their partner? What if their partner can't contribute anything like the same money and they marry? What if you lose your job/health?

All of my friends have been given help by their parents. Most have been he given a lump sum of cash as a gift. Some were allowed to live rent free for a long time to save. I wouldn't accept either. I kind of hope my kids wouldn't either.

Johnnyfinland · 16/05/2018 13:44

As others have said, it propagates an unfair system where wealth stays within wealth. I should add this is all hypothetical to me though as I don't have kids and am not in a position to buy a house even if I did.

I find the PP who says they never want their DS to have to rent apart from student housing interesting - what if he wants to try living in a few different places after uni? He may well know where he wants to settle but plenty of 21year olds don't, and renting allows you to up sticks and move around the country and even abroad to try it out. I wouldn't have wanted to be saddled with home ownership that young, and personally it still feels like a millstone even for me at 28.

I'm an only child and my parents have me down to inherit their house but such is my moral opposition to the housing market and the way it's structured to keep the rich housed and the poor renting/homeless, I've asked them to reconsider passing it on to me and use the estate instead towards the good of society. I don't know how or where I'd rather see it go or if they'll do that.

I don't want to have to rely on them, I have cheap rent and a salary that allows me to save (which I'm lucky to have, I know) and if I did have kids of course I'd never see them starving or homeless and would help if they were in need but I wouldn't give them anything on a plate. A generation of people who can't afford to buy will eventually, I think, see prices fall in the market because nobody can sell. I'd rather be part of the change pushing for a fairer housing market for all than only think about myself or my hypothetical kids

Johnnyfinland · 16/05/2018 13:47

Also @housewars how can you guarantee either of your children will earn enough to pay back the mortgage on the house you buy them? It seems rather that your plan hasn't taken in other eventualities like them wanting to travel or not wanting to settle that young, tax implications as others have said, potential unemployment...

ikeepaforkinmypurse · 16/05/2018 13:48

I really don't agree with the comments about the unfair system. Well, yes, life is unfair. Little Prince Louis has just been born in a life of luxury and privileges that none of us really even comprehend. So what.

I don't know why anyone wouldn't help their kids in any possible way, house, job, or anything you can do.

I agree with posters, do research carefully the best financial way to do it.

allmycats · 16/05/2018 13:48

I can't understand why people think that giving some one part of their 'inheritance, when they are actually most in need of it is not done more often. Assuming that you have the disposable income to do so I would (and have done). If you have to re-mortgage to do this then you don't actually have the funds to do this.
But, each to their own, I was happy to help when I could, there are no pockets in shrouds !!!

Chattymummyhere · 16/05/2018 13:54

Most people my age who own have been given large deposits from family. The others don’t own or saved from being allowed to live rent free. When my children are older if I was in a position to help I would.

A friends family own multiple houses but won’t even let their child rent one at full market price. The mind boggles.

DBoo · 16/05/2018 13:55

I don't think anyone is getting anything on a plate. My parents are in their 50s and were able to get a 100% mortgage. If we could get a 100% mortgage we would have a much better chance of getting a house. It's not like people who rent aren't paying their way and working hard like everyone else. Although i fully accept i am completely responsible for my credit rating but im from a poor family. I've practically lived on credit since i was 18. It was actually my parents that suggested my first loan.

BlueJava · 16/05/2018 13:55

No, I won't be helping them on to the property ladder and I certainly wouldn't do it if I had to take on the liability of a mortgage plus tax implications to do it. Supposing they no longer want to live there for example. I also feel that it's up to them to make their way and it's a good incentive to instil an excellent work ethic. Tough I know!