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

[HouseWars]

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?

I remember my MIL visiting us in our tiny house, with three small children, working our arses off just to pay the mortgage, and saying how ridiculous it was that she was living in a 6-bed house on her own.

Shortly after she gave us enough money to buy a bigger house, and I have been grateful ever since.

I hope I can help my children out if/when they need it in the same way.

Conversely, if/when my MIL needs financial or other help we'll be there for her.

Various financial difficulties with the idea, I think. If you own a house already the Stamp Duty will be 3% more. If you are letting out the property then your mortgage would have to be a buy to let one and then there is the issue of capital gains. When I was young my father gave me £4k ( a lot of money then) as deposit for my house. Lots of my friends parents lent them deposits which they repaid either over time or when they sold the house ( usually to get married and buy a joint property) Some got let off the repayment of the loan.

Oops, didn't answer your question! We can't afford to help out with deposits at present but will give some of our retirement lump sums to our children which they will hopefully use to fund their first purchases. As we have lost a number of friends and relations at relatively young ages due to cancer and accidents we don't regard happiness as being tied to money and hope they would use anything we gave them to enrich their life in any way that made them happy. DS1 would almost certainly put it towards a house, DS2 might travel, equally valid in my view.

My parents are better off than us, my children will be better of than us. We're mid 30s and we're the other side of the story. We bought in our late teens, then the market crashed. We cant remortgage because of negative equity, only one full time income now and poor credit after both being made redundant in our late 20s and struggling to find work. We are litterally fucked and looking forward to the eventual relief of bankruptcy when interest rates get too high again.

My mother on the other hand inherited properties and business worth over £1.5mil (after taxes) a few years ago. Her house was bought by my grandparents as a gift to her when she was 19. She could buy all of her offspring a house worth £160-200k and still have just under £1mil left. Unfortunately my mother is not that generous and says we'll inherit it anyway. She doesn't appreciate that when we're in our late 60s and she's in her 90s (and my Brother will be long gone - she had him at 17) that a house will be meaningless when it could have been a 'home' that was loved and lived in for the previous 30 years. I don't want money then. I wouldn't say no to being able to have a 'life' now though. Which we are greatly struggling to do.

I look at my own son and would give him anything to help him and wonder why is it she doesn't feel the same. The irony is my Nan wanted the money to be given to help us all.

I don't think your sums make sense.

1. You pay deposit (eg £100) + then monthly mortgage (eg £10)
2. They pay you rent equivalent of monthly mortgage (eg £10)

So, their rent just covers mortgage.

1. When they get to £100 rent, you give it back to them.

How have you not lost anything?? You've lost £200. Apologies if I misread

Ah, I think I get it. They buy it off you for £200, with £100 deposit and £100 mortgage.

Phew, that's complicated. Just give them the deposit??

Sorry Finland I should have emphasised the words 'have to'. If he wants to rent that's fine but I don't want him trapped in dodgy rentals with no possibility of escape.

I would, but not in the way you are. I'd probably do something along the lines of coughing up at least half of the deposit or more if I could afford to and then have my DS save up the rest to sort of teach him that he'll have to do the same (but with more money probably) to pay the mortgage each month.
My dad offered this to me, paying half the deposit on a rented place but I instead moved in with my DP so he got out of that one!

I think if you want to do this , you definitely need to take legal advice. If you give them the money, it could be seen as deliberate deprecation of assets, when it comes to a point where you need to access the care system. They are able to go back as far as they want, there is no seven year cut off point like the tax system. As more pressure mounts on the care system, they will seek ways to get out of paying and will insist that the monies you gave away are returned to you and spent on your care. Likewise of you have a second home in your name they will expect you to fund care by selling it, regardless of who the occupants are. People assume they won't need care until they are in their dotage, but unfortunately that isn't always the case. Make sure you are protected in a worst case scenario.

What lovely, lovely parents you are @Housewars - lucky children!
And yes we hope to do the same...

This kind of thread makes me feel sad and envious in equal measure!
I only have one parent and they live in a council property, so no help there.

I'm 40 and a widow/lone parent working in a min wage job around my infant school child. I private rent, more than majority of mortgage payments!, and quite frankly if I can save a tenner a week I'm doing well.

I'd love more than anything to help my child in the future, (and be helped now), but unless something amazing happens we'll all just keep struggling along as we are.

The way you’re suggesting where you buy it and they pay rent to you, then you release the house to them when you feel they’ve paid enough - it sounds a bit controlling. Maybe my own baggage talking but I wouldn’t fancy that. Being in a house but have parents or inlaws name be on it, they could hold it over you at any time, demand keys or to be able to come in whenever they like... not saying you would necessarily do that op, but for me I’d rather let them buy their own house in a normal way and give them money towards deposit if we can.

Rory So many are in your position and it must be horribly frustrating.

I also can't get over not helping if you have the means to help. What on earth is the mindset of those who actively choose not to help.

Your sums don’t add up and your plan I don’t think will work; as others have pointed out you can’t have your name on the deeds and another on the mortgage and there will be tax implications as you’ll be buying a second home. I agree that helping your children out if you can afford to is a lovely thing to do, but in your case gifting the money would probably be a better way to do it. Take financial advice though.

You sound like absolutely lovely parents and your kids are lucky to have you. However, finances are personal and I wouldn’t criticise anyone that doesn’t chose to do it. Being able to afford it means different things to different people.

DH and I are self-employed and have plans to work considerably less and devote more time to creative projects in coming years and probably move abroad. This is a luxury we worked very hard for and means a lot to us. We put our artistic ambitions to one side to do more corporate work to provide for DC while they grow up. We are happy to support them in many ways but we won’t subsidise their future homes and we in turn did not expect or ask this from our own parents. There is no reason for them not to stand on their own two feet. I am not British and I’m used to people renting in other European countries. It’s not the end of the world to not own property and sometimes people have a far more comfortable lifestyle and overall more disposable income when not all their money is tied up in mortgage repayments. More importantly, there is absolutely nothing wrong with enjoying the fruits of your labour and have a good safety fund for your own old age. I would not expect DC to care for and look after us. However, we are making sure that we keep that money aside for us. Having DC does not mean that they should start at the kind of living standards we worked for a considerable time to reach. Personally, I believe that young people need to learn to fend for themselves and not expect instant home ownership.

We bought our son his own flat at 17, why not if you can afford it, I’d rather he had our cash now than when we die!! We going to buy him another to rent out so he will always have a way of making cash!! We think of our money as family money, we feel secure that he will always have a home.

I know of a family who wanted to help out adult children. It turned out badly.
The older people were interested in buying property in the locality that they had lived in for many years.
The younger people said that was not giving them the choice of where to live.
If the older people had bought property in the areas the younger people wanted it would not be a good investment.
None of the partners nor their parents were able or willing to put any money in to help the younger people so it would all have been provided by one set of parents.
It seems like such a nightmare. It does not look like a good idea.

My parents witnessing the naughties boom starting, didn’t want me to miss the boat, so bought a small house mid property boom while I was in last year of uni and rented it and sold it to me a couple of years later when I was ready to buy ( I had a decent graduate job and got a interest only mortgage). It had in the mean time gone up in value by about £20,000 and they sold it to me for the price they paid.
They did unfortunately get landed with a tax bill because of this ( at the time they were advised they wouldn’t) but apart from that it cost them nothing and I was able to get a leg up on the property ladder. There was no stamp duty to consider as it was only a small cheap house so under the threshold.
So yes definitely take into consideration tax implications etc. But if you can do it why not?

I'd like too but not sure how we will and if we will.

I'd worry about it not being protected as a marriage could see somebody walk away with half or more of it. I certainly would if pre nups become legal and binding.

You haven’t considered this properly at all. Aside from the tax reasons I won’t bother to repeat, who are you to dictate what percentage of your child’s house their future partner may own?

I’d run a mile if my parents offered me this. Either loan them the money or don’t but you’ve massively overthought this whilst simultaneously not thinking it through at all.

My in laws are very well off have helped all but homes Barr my husbands youngest brother

He choose to do a art degree he’s 29 and never had a job not a weekend one nothing never

He gets an allowance from my in laws still lives in a flat they own

We have all come to conclusion he couldn’t really work now even if he wanted to can’t see Asada employing somone who has a art degree who’s never worked

He s a trustafrian that’s why

At the moment (two young children) I'm of the mind to not provide huge chunks of money to my kids even though I'm likely to be pretty comfortable financially. I may change my mind depending on circumstances.

Boxsets It’s pretty easy to ‘protect’ the money from a partner; buy the house as tenants in common rather than joint tenants and get a solicitor to draw up a declaration of trust regarding the deposit. I have loads of friends that have done this, usually when one had received a substantial gift from their parents. Thankfully none of them have tested it out and split up yet though!

We have 2 dcs. We gave both of them the deposit for their own homes.

We made them aware that this money was available when they wanted it, no pressure to commit immediately, just shout when ready.

DS1 used his deposit almost immediately, DS2 claimed his a year later. As far as we re concerned, they are getting part of their 'inheritence' now, rather than having to wait for us to peg out. I would never have put any conditions or claims on this money.

We were very lucky to have been able to help them.

They might not want to live in your house