Should I lend them 10k?

[SupineSlumber]

My parents, in their 60s, are planning on moving house. They’ve found somewhere that they like, and they want to buy it outright with cash, without having to wait to sell their own house first (although they said they hope to sell as soon as possible). However, they don’t have the necessary amount: they have 100k in savings, and are looking to borrow another 100k from selected family members/close friends (not exactly sure as they haven’t told me but I can hazard a guess). They’re very stubborn and are adamant that this is the only way they can secure the house that they love, without being part of a chain etc. Selling their own house would effectively cover the cost of one they’re moving to so they have that as an option but they don’t want it.

They asked me how much I could lend them, and it’s comfortably about 10K. But now I’m thinking this whole thing might be a bad idea. I don’t know who they’ll be borrowing the rest of the 90k from and I don’t want to audited as part of that process (not that there’s anything to hide, but it just seems very messy). Also it just feels extremely indulgent to me, to try to be in the position of a cash buyer whilst roping in lots of people to fund that through loans. What if their house doesn’t sell as easily as they think it will?

Am thinking of withdrawing the offer on the basis that it might not be financially prudent, but I know they’ll be hugely hurt. WWYD?

(NC just in case)

They actually sound emotionally abusive towards you, OP. Please look after and protect yourself.

I suspect they’ve already remortgaged their home, for some equity release scheme. They probably are not as financially stable as they are trying to make out.

Even your mums text to you saying “it’s ok, I know you can only give 10k” demonstrates that she’s viewing it as something being GIVEN and not LENT!

I suspect they’ve already remortgaged their home, for some equity release scheme. They probably are not as financially stable as they are trying to make out.

this makes perfect sense 🌺

Bridging loan is the only way to go.

It all sounds odd

If they don't want to be in a chain, they could sell their house, bank the £ and they would be cash buyers

Time40 I think most people are saying they wouldn’t do it because these parents clearly don’t ‘need’ the money

Some are, yes. With some it's a lack of trust.

(Your time-based username is so much more dynamic than mine, TimeQuest. No doubt you'l be off in your Tardis soon. I'm just going to put the kettle on ... )

@Ishoos

As part of money laundering regs don’t they have to show where they got the money from? I would only do it if you had a legal agreement drawn up and witnessed covering repayment.

We lent some money to our daughter to help her buy a house and we had to sign a note for her lender to say that it was a gift and that we could not demand repayment. I assume less to do with money laundering than the affordability of her mortgage.

My take on this is that parents lend their children money, not the other way around unless real hardship is involved, although I’m having trouble formulating an argument to justify that opinion…

In the 80s when my father was made redundant and the family car gave up we gave my parents an old car that we were about to sell. I still remember that, even though they accepted it, it made them very uncomfortable.

Oh I’m sorry your parents are like this to you, it is very unreasonable behaviour and you know you wouldn’t have a leg to stand on to get it back.

They don’t sound particularly solvent to me either, all that glitters isn’t gold.

As an aside I’d have totally had kids if I knew you could get money off them, I thought it was the other way round 😂. I never realised they were little piggy banks.

We bought a house before selling the old one (there were very good reasons for this), we took out another mortgage and with a little budgeting we thought we would be fine, after all we’d had loads of interest initially. The old House took 15 months to sell, it was a worry. Also, have they thought about the extra stamp duty you have to pay on a second home (3% extra) I think - you can claim it back once you’ve sold but you have to sell within 3 years to claim it back. Also in our area, if your second house remaina empty for two years, the council tax is doubled.
So for 15 months we paid two mortgages, utilities and council tax on two houses and had to lay out the extra stamp duty. We did it, it turned out fine...but it all could have gone very wrong!

I would tell them you don't have it to lend. I also think your DM kindly opened up this avenue with that little comment about not worrying that you"only" have £10k to give them.

I expect you would get your money back, but when? Without pressure to get a sale completed, they might hold out for an unrealistic price, drag their heels moving, decide to rent it out instead and pay everyone back slowly....just say no.

I don't see the big problem with this in a fast moving market. Maybe they have stuff to do to existinghouse to maximise sale price.

You can get a refund on the additional stamp duty if you sell within 3 years.

Where has the £100000 savings come from? Could be

1. conventional savings ( best in ISA)
2. inheritance
3. remortgage existing property
4. tax free lump sum from pension ( worryingly implies potentially £300,000 left in the pot that for a couple will not go far).

Obviously 3 and 4 more concerning . Could they be thinking by having 2 properties one could be their pension ( buy to let - but conveniently brought for them).

@willitbetonight the problem is they can’t afford it so are trying to make other people pay. Fine if they can afford it but why make it other people’s problem,

"Sorry mum, didn't realise I'd put my money in an untouchable savings account, I can't do anything with it until 2022 earliest, I'm really sorry...🤥"

They need to buck up, people buy houses every day without leaning on their friends and family for loans.

@willitbetonight

I don't see the big problem with this in a fast moving market. Maybe they have stuff to do to existinghouse to maximise sale price.

You 'gift' them the £10k then..

Crazy. They're not cash buyers if they don't have the cash. It sounds ill thought out by them and not at all secure for you. I wouldn't do it!

They've told the EA and vendor they are cash buyers to secure the property over other interested parties...

Would they believe you if you said you wanted to check with a soliciitor first before putting anything in writing and you then say you've been advised not to.

I know loads of people on here will tell you to just tell them to get stuffed but that misses the point that real life doesn't work that way

This is sounding more dodgy by the minute.
They want you to sign something saying you are giving them 15,000.
Good luck if they don't pay you back the 10,000 when they have a document signed by you saying it was a gift!

Would you not be committing fraud yourself if you do that?

Oh there’s definitely going to be a tantrum. Fully prepared to be told that I’m the most ungrateful daughter in the world and how much money was wasted on my education!

As long as your response to that is an internal 'so what?', no problem. You could write a very long list of their faults, you just don't say them out loud. So if the best they can do is that you're ungrateful, it says more about them than it does about you.

Op tell them the truth.
The bizarre requests stink more than rotten fish.
I’d sooner fall out with them now and keep my money than fall out later 10k down.
And you know this will happen.

My reply to your mum's text would be: "Actually, I can't afford it, so it's a no." And keep repeating as required. Don't be drawn into methods how they can make it doable for you, just repeat "No, I can't afford it." Whether you say your job is at risk, your savings are tied, you need it for emergency repairs, whatever, the message should be "I can't afford to give you money" in a clear, non-ambiguous way.

Of course they'll be angry at your thwarting them, fortunately you don't have to answer your phone or look at their texts if you can see it's either of them.

"Oh there’s definitely going to be a tantrum. Fully prepared to be told that I’m the most ungrateful daughter in the world and how much money was wasted on my education!"

That nastiness is the perfect reason to say no!

They have the means they just don't want to wait!

Well, ain't life a bitch!