increasing mortgage to repay parents

[Jadefeather7]

So when we bought our place my parents kindly helped us out with our deposit so we could get on the property ladder. It was made out to be a gift at the time but has now turned into a loan (which I am fine with as it is their money at the end of the day)

My mother is a serial “worrier” and has been her whole life because she had an insecure childhood. She’s always worried about the family financial situation and had never really spent very much. My dad (who is an accountant by the way) thinks they are fine financially but she disagrees.

In any case we always wanted to try to repay them, and now that we have decent incomes we suggested doing monthly instalments however whenever we mentioned it to her she would say “Not now- I will let you know if/when I need it” I assume she’s also thinking about inheritance tax etc as she’s mentioned before to my brother about wanting to set up trusts etc. DH and I are getting a bit fed up off her constant digs about money whenever we mention going away on a holiday or doing something nice for ourselves. She talks about her fears of being homeless and not being able to eat which is honestly ridiculous as she knows that as long as her kids are around that could never happen. We would rather not eat ourselves than see our mother going hungry. But anyway we want to end these conversations and do a lump sum payment to her so she has peace of mind that the money is in her bank account.

We have good incomes so we can look to increase our mortgage. Have discussed with a bank and pulling out the amount we want to repay would increase our mortgage by £600 which we can afford. Obviously hoping that there aren’t massive changes to interest rates. Is there anything else we should be aware off or think off before we go down this route? I’m a little nervous as I’m still fairly young and not massively financial savvy! Thanks

Well she can’t have it both ways. She can’t give money as a gift and then want it paying back. And she can’t keep giving digs about you owing money and then not allow you to give it to her. DEFINITELY DONT increase your mortgage. Ignore her protests and open a savings account. Pay x amount of money a month in there. The next time she complains about the money just tell her about the account and that the moneys there for her to access whenever she’d like

@dollymixture22 When I ask her this in order to decide what lump sum to give she starts saying she doesn’t need the money yet and will not tell me what she wants. I’m working on giving back the initial deposit. If it’s the equity that was built up then we would need to do that with additional repayment. I don’t think we can remortgage that amount.

I think you are solving the wrong problem. She is anxious - I would acknowledge the anxiety and explain that life is indeed unpredictable, but that you will always make sure she is ok if you can. When she gets on at you about the money it presses your buttons - but maybe all she wants to hear is "yes, we are so lucky you could do that for you."
If you are going to repay, I would set up an affordable amount and put it into some kind of trust or savings account. But I don't think the money is the problem; I think it's a symptom.

Yabbers the same paperwork was required 4 years ago when my parents contributed to give us a larger deposit. However, when I bought my first house around 11 years ago I don’t remember anyone asking where the deposit came from, so I think it’s a relatively recent tightening of the rules, probably coinciding with stricter affordability criteria etc.

Dont do it.

If you put £600 a month in her bank account she'll start worrying about how shes going to cope when you stop giving her that.

If you give her a lump sum shes going to panic about how its invested so it keeps its value.

What she wants to hear, is something along the lines of "if dad dies and you run out of money, your daughter will make sure you have enough money to live off", she brings this up because she's trying to remind you this wont be her being a burden, but family "paying back" help. It's not about the actual amount, but the emotional debt - she made sure you had a good financial start, you'll make sure she has a good financial end.

Try instead of talking about the actual amount, say "dont worry, we'll look after you if anything goes wrong."

How old is your Mum?

It sounds as though things have progressed from anxiety into obsessive... very early stages of dementia?

She’s in her mid 60s. I don’t think she has dementia. She’s been super anxious about money her whole life, even in good times.

@DisgruntledGuineaPig I agree that’s what she wants but I’m so tired of having that discussion every time I see her and it’s not a quick 5 min one. It takes a lot of time and energy to convince her that she won’t be left destitute and then the next time we see her it’s the same things again.

Put the £600 a month into a savings account and then it will be ready when needed

I'd be wary of making any significant financial changes, particularly rate dependant ones, in this particular political climate. You might want to wait six months and see how things are looking.

@cheeserton Yes that did occur to me. With brexit is it a good idea to do something like this. I need to consider all of these things before we take any further steps

Well then giving her the money back wont fix the problem, it might just make it worse as now she'll worry if she spends that and needs more help, you won't feel obliged to help her out.

Doing this might make her more obsessed about being left destitute in her old age, and make your own life harder.

She doesn't actually want the money, she wants the security.

Could you try heading her off when you see her "hi mum, before you start, yes we'll look after you if you are poor in your old age. Yes we know we only have our house due to your gift. If you lose everything we will see you right. Now, what's new with you?"

I’m not sure I would spend £600 a month just to reduce sarky comments (a gift cannot change into a loan and they seem not to want the money back at present anyway)! I would reduce the amount of time I spend with someone who makes unpleasant/judges comments to me though and would certainly keep any info I give them re holidays etc to a minimum.

@Jadefeather7
Dementia isn’t limited to old age.
If it’s not health related I think her behaviour is irrational, they are wealthy and secure she’s no need to carry on like this.
Can you be blunt with her?
‘Mum if you can’t stop this nagging I won’t be coming round so much, it’s exhausting’

They used your name and earnings to buy a BTL property, kept the rental income and you think they gave you a gift!!! They used you as a tax dodge! You do realise this don't you

Exactly what I was thinking!! OP do not pay them back.

This is all a bit murky. They should have been clear with you when they bought this house in your name what would happen.

Do you know why it was in your name - to reduce taxes I assume.

I would quietly get some legal/financial advice. Be clear with both your parents that this money is putting a strain in your relationship and having this hanging over you is damaging your ability to plan for the future.

Be clear you understood this was a gift, and you hadn’t made plans to repay this amount. Also be clear the house should not have been in your name if they didn’t want you to benefit from it, the rental income will have impacted your income tax etc. It also meant you weren’t a me to take advantage if any first time buyer schemes had you wanted to.

Open a joint savings account in your name and your mother's name. Deposit what you would pay back monthly in that account. She now has it and can see that you are paying it back. If she needs it she can access it. If she doesn't, you will eventually get it back when she passes.

Yabbers this is now standard. For money laundering purposes they have to check where the deposit is coming from, and then for affordability the lender needs to know what additional financial obligations you have on top of what you owe them. I don't know how true this is but have read that signing the 'gift' letter when it's actually a loan is mortgage fraud.

However this situation sounds both more complicated, and dodgier. It sounds like OP's parents have been using her for their own financial security for a very long time now, and if this remortgage goes ahead it won't be the first time their financial interests have been put above her own.

Decent parents don't ask their children for money unless things are really desperate.

What GeorgiaGirl52 said.

I actually think your Mum would benefit from counselling. Even if you gave her a huge lump sum, I think she would still have the same money anxiety.

The problem with putting the money in a joint account is it will impact your lifestyle indefinitely. It sounds like your mum will never need this money. So you will be sacrificing disposable income very month for it to just lie in a bank account , and if you have siblings they could inherit some of it. Your mum will also hopefully be around for another twenty or thirty years. Are you prepared for potentially tens of thousands of pounds to sit in an account without being used or accessible for that long.

OP even if you want to treat this as a loan to keep the peace I'd strongly recommend securing unsecured 'debt' against your home. At the moment, if something happens meaning you can't repay then to be honest there's not a great deal your mum can do except sue you (or carry on being a royal pain in the arse). If you run into difficulties paying a new mortgage your home is at risk and your credit reference file will be badly impacted.
Please think about the sensible
suggestion to put money aside instead as it's under your control. I appreciate I don't know your mum but I agree with a pp who recommended being very direct about the effect she's having on you to stop this issue 'festering' as you all tiptoe round her. Your first responsibility is to your own household NOT your wealthy parents

*NOT securing unsecured debt ffs

Jadefeather7 As others have said, I don’t know how you can owe them money if they were using you as a tax dodge to get rental income on the first property. I don’t think your mother will ever be happy so no I would not be remortgaging unless it was clear that they had provided a loan.

OP I think that perhaps you have been so used to working around your mum's anxiety and reassuring her your whole life, that you've lost sight of how badly she is treating you.

• They put a house in your name then used your tax allowance to reduce the amount of tax they paid on income they received. That's tax evasion, it's illegal and they used you for their own benefit.
• They "gave" you a house deposit as a gift, this was declared to the mortgage company as your own money and that it was not a debt. That was untrue as it turns out.
• Your mum goes on about this every time you see her and reminds you of your obligations. Regardless of your mum's anxiety, this is a deeply dysfunctional dynamic and a terrible way for a parent to treat their child.

Maybe you should consider therapy yourself to work out why you are still desperately trying to keep your mum happy, when she has, and continues to, treat you badly.

Very hooky kooky re what your parents did when you were 18!!