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)

There will be additional stamp duty to pay on a second home on top of the 200k. Money laundering regulations will also question where any loan came from and your interest in the home. Keep a copy of this correspondence as your evidence of a loan.

As long as they have included the additional costs and you are happy to lend them the money there is no issue.

They can claim the additional stamp duty back if they sell the first house within 3 years but no later.

Haven't RTFT, but don't lend any amount you wouldn't be prepared to give.

In a word........................NO

Don't ever blend family and money if you care for either

I have a bit of this in our family - certain individuals see others as resources for their benefit and others like to keep everyone controlled by tying them up in these sorts of arrangements. Sometimes the motivator is good faith, sometimes its greed and 'cant lose' moneymaking scheme that inevitably struggles. Sadly when I was younger I didnt really see the problems and motivations or have the ability and strength to say no - but it sounds as though you have a good measure of your parents.

At uni I got tied up in one of these plans had to lose money and be limited/restricted for years with my ability to change the situation and move on with life and plans (eg those that work for me, my now DH and kids)

I dont play any of our family financial games now, anyone who asks gets a flat no. If I choose to offer selected individuals some help (and I still do) that is my choice and it comes with no strings attached or obligations. There are certain people who I would offer financial help to, others that I just wont, and now after a few years of consistent refusal to discuss nobody brings it up anymore

Anyone who uses the line 'Well, Id do it for you' gets brought back to reality - Im sure you would but we both know its never going to happen because you have the financial competence and planning ability of a confused baby chipmunk'

My bothers and I did this with my mum - she needed to buy a flat before she could sell her own so we all offered to chip in and lend her what she needed. At some point in the process, she decided we were actually giving her the money and started taking about keeping her old flat and renting it out for the income. Took some tough conversations with her to bring her back to the fact it was a loan.

On retiring, my eldest sis and her dh sold their house, moved to the area where they wanted to live and rented for six months.
This freed them from a house-buying chain, took away a lot of the stress of moving, enabled them to really get to know their surroundings and make an informed purchase, and cost them about £4,000 in rent.

It worked so well, I intend to do the same.

Perhaps you should suggest it to your parents.

May I ask where you live OP? Different rules for England and Scotland. First to admit I don’t know Wales or Irish rules

No, unless you are happy to gift them the money.

But surely you would get the money back via the proceeds of the sale of their home? Or is the home they're selling worth much less than the one they're buying?

Personally I wouldn't think twice about lending my parents or siblings money. I have previously lent my brother £10k and I got it back 5yrs later. Wasn't an issue for me.

Yes, they are regularly outrageous and sadly have form for this kind of entitlement in their lives (mum especially) and are prone to using every single trick in the book to get what they want. Even if it means pressure of manipulative tactics (like asking me to give more than what I reasonably said I could afford).

I can't even vouch for the veracity of what they've told me (they say they have 100k, it wouldn't be impossible for it to be150k). 'A flexible relationship with the truth' is a gentle way of putting it.

Sorry to say but you sound like you don't have the best relationship with them, or that there are other underlying issues that you don't wish to disclose.

In this case, I would say ignore my last post and don't lend the money as it seems as though it could lead to a fallout.

I understand it as they will lose the house they want because sellers don't want to get involved in a chain, and they don't know if hteirs will sell fast. I would give then a loan, they can repay when sold their house - can't see what's wrong wit h that if the house they;ve foubd to buy was exactly right and hard to find.
Looking for a house myself currently and it's a pita to find something you like and not be outbid / no chain buyer get chosen,

It's likely they/you will have to declare the £10k as a gift rather than a loan, which means your chances of getting it back drop even further. The paper trail will not support repayments.

Do you have £10k to give your parents? That's the question. Not, do you have £10k to lend to your parents?

If I had a good relationship with them and I could afford it to lose the £10k, I would. But only then.

sorry for typos, bad lightlng wher I am!

I mean I would but I know my parents would pay it back ASAP but then again they would sell their home they're in first anyway. The fact you have asked is gut instinct you shouldn't do it. It's not only you they are paying back.

I would, but I trust my parents and PIL completely. When you are older, the stress of moving house is huge. Being chain free is a good thing.

However I would want to be sure they have thought it through - I'd want them to get some estate agents to value their house, I would want them to show me prices of houses that have sold recently, I would want them to talk to me about any problems that could hold up the sale of the house. Ideally I would want the house on the market, and then the sale can be bubbling along beside their purchase. That's not unreasonable.

Also they should be aware there are additional costs owning two homes, have they taken that into account?

Do you know who else they are borrowing off? £90k is a lot to find down the back of the sofa.

Hell no. Just tell them you can’t get the finance.

Haven't read the thread so sorry if this is already mentioned. If you decide to go ahead, make sure it wouldn't affect any potential benefit claim you might have to make in the future. It could be seen as deprivation of assets if it's a gift. Might be ok if it's a loan (get it documented). Definitely don't do anything without taking legal advice.

Read the Thread 🙄

Have they even put their house on the market yet?

I would probably be prepared to take on a little risk for my parent's sake, but I would expect that risk to be mitigated to the extent they were capable of - so they should be moving as quickly as possible to sell their house, they should have checked recent sales on comparative properties and be making a conservative estimate of how much they'll get, they should be offering some form of surety for the money against their old house or the new one and reasonable interest if it wasn't returned in, say 8 months.

Too tired. It was a brief bit of advice - easy to skip if unwelcome.

I just want to know who else they’re borrowing off.

I don’t have many friends/ family members that I know would throw a couple of grand my way so I didn’t have to debase myself by whispers getting a bridging loan from a high street bank

"They asked me how much I could lend them..."

I wonder why they would assume you had anything to lend them. The worry would be you would not get it back. Or at least for ages. So only lend if you really do not mind not getting it back.

"
Might just say sorry, but I’ve been warned against it by my ‘financial advisor’... (our crusty old finance officer at my workplace will have to step into this pretend role)" Love this idea, yes, a good way to distance yourself from the decision.

I'd like to help you but I cannot.

I think the fact they asked, assumed you would lend them and then tried to go higher. I lent to a relative to try and keep them out of trouble. It didn't work, they got into difficulties and it took a good while to get my money back. I didn't begrudge it but it was not nearly as much as your parents are asking of you.

I've done this but in order to do it you need to have 100% total and absolute trust and confidence in each other's character, reasons and motives, esp. commitment to acting in good faith, having genuine plans and ability to sell the house and iron determination to repay the money pronto.

Reasons for borrowing could be genuine and the intentions wholly good: for instance, that they have found a house they don't want to lose the opportunity of buying and the old house may not be quite ready to sell and needs some time to bring it up to sale-ready condition; and bridging loans are expensive.

If you don't have all that mutual trust and understanding 100%, then you need to consider your own financial situation and theirs, weighing up possibilities of complications and things that might go wrong, against the natural wish to help and support close family in time of need. Do you have housing security, with a house of your own and a mortgage commitment? And job security? Can you afford to hand over the cash and would you be willing to mentally write off the loan, for the sake of family? Can you impose conditions, for instance, insist that you will only come up with any money if their house is firmly on the market and will yield sufficient money to repay all the people they're borrowing from? To do this would also mean having discussions about whether they have a mortgage on the house and if so how much etc., something you might not relish doing it but is absolutely necessary before you jump into anything.

Agree with Russellbrandshair you do not need a reason to say no. But I guess sometimes it is easier to have one. Then go broken record.

Wow, there must be so many people who have a terrible relationship with their parents! If mine were still alive, I would have done this without a second thought, and without any legal agreement ... but then, I trusted mine. This thread is so sad!