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)

Wow, there must be so many people who have a terrible relationship with their parents

sadly many people didn't grow up on Little House on the Prairie 🌺

I don’t think I’d do this in your shoes.

But anything like this should certainly be put on a legal footing to secure it and allow for unforeseen consequences, death, inheritance, etc.

I offered to cashflow my dad so he could buy a flat he wanted in case his didn't sell, in the end I didn't need to. I caveat that with I 100% trust him but would have got something legal drawn up in case he dropped dead and I had 4 siblings trying to get their hands on the equity I loaned him.

Because you have already agreed to the loan, you are putting your relationship in a difficult situation if you withdraw the offer. It would be different if you had never offered. You are in a difficult situation and risk your relationship if you withdraw the offer. Also, be careful in future about enabling your parents to make silly decisions.

We borrowed 150k off a family member once to buy first, then sell ours after, it makes the whole process loads easier. But you do have to pay extra stamp duty as you then own 2 houses for a while ( it's easy to claim back when you sell the other one) If I had the money they needed and i was doing nothing with it ,then yes I would lend it them.

If your a cash buyer with no chain your more attractive to sellers , so might be able to negotiate a lower price.

You don't get audited by anyone all we needed to show the solicitor was proof the money was in the persons account and written confirmation that they were gifting us the money ( money laundering ) it was a simple process.
We paid it all back the day after we sold the other house.

Quite frankly it sounds they can't afford not to sell their house!

It will be annoying if they struggle to pay you back and yet are sitting on a huge asset they refuse to sell.

I agree with the above , I would lend my parents the money without doubt, Looks like most people on here value money more than family !!!!!

I agree with the above , I would lend my parents the money without doubt, Looks like most people on here value money more than family !!!!!

I would say most don't have a spare house knocking about to sell if times get tough!

@rainkeepsfallingdown

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.

I don’t see why that would be if they’re not getting a mortgage.

But I still wouldn’t lend them the money. They can sell their house like normal people rather than put on you op when your job may be at risk. Please tell me that you do at least own your own home.

As for wWhat to say to your parents? Unless they can find out otherwise, I would straight up lie that there have been some redundancies or an announcement that some will need to be made rather than the financial advisor one. It’s much cleaner and can’t be argued against.

@namechangealerttt

I offered to cashflow my dad so he could buy a flat he wanted in case his didn't sell, in the end I didn't need to. I caveat that with I 100% trust him but would have got something legal drawn up in case he dropped dead and I had 4 siblings trying to get their hands on the equity I loaned him.

Because you have already agreed to the loan, you are putting your relationship in a difficult situation if you withdraw the offer. It would be different if you had never offered. You are in a difficult situation and risk your relationship if you withdraw the offer. Also, be careful in future about enabling your parents to make silly decisions.

The thing is, we’ve had many ‘difficult’ situations and ‘risky’ footings in the past: moments where they’ve created artificial dilemmas that have put pressure on me to do what they ask. And yes, it’s been very difficult when I’ve refused their emotionally charged requests, disappointed them and changed my mind, let them down, and all the various things they say, but I’ve stuck to my decisions and they’ve moved on. What I’m trying to say this, they have form for this kind of pressure-laden dealing and I refuse to do something imprudent because I’m too scared to say no to my own parents.

And I do think it’s an artificial dilemma because the idea that they can only do this in this one specific way is false. They’ve refused to entertain many other options that aren’t their way.

@Chumleymouse

Surely it’s different if you’re being ‘gifted’ different pots of money by (I’m assuming) at least 4/5 separate people? My thinking is that this would raise some red flags.

@Italiangreyhound

"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.

It’s an interesting question as to why they asked. For some reason I think they assume I’m loaded: for a few years I’ve had a well paid job in London, but caveated with things like very high outgoings, which doesn’t leave me with anywhere near as much spare cash as they’d like to think. They probably think I have expensive taste, based on the types of gifts that I buy for family on special occasions, That I overindulge in everyday spending - buying things like “Pink Lady apples” (the high of indulgence!), getting birthday cards from Paperchase instead of Card Factory (their sales are very good!) or the occasional shop from M&S food.

They are frugal in most living expenses and spend very, very little on themselves, which I personally think is sad (conversely, they shell out a lot more than I do on things like cars).

I think this isn't straightforward due to money laundering rules. Maybe you could phone an estate agent and ask, it might be that if you have full cash you can buy a house but I think if someone has a mortgage you have to demonstrate with signed letters etc where the money came from, they won't lend if cash deposit is just a loan.
But if the pressure is off to sell their house, I can see them asking some daft too high price and no one getting their money back for months/years.

Do you know the numbers on their current house? Free of mortgage? No equity release or interest only mortgage lurking in the background?

From the history you have given, this would be a big fat no! As mentioned have they even taken into account the extra stamp duty costs, house insurance, council tax etc that will overlap and need to be paid.
Then there's the solicitors. They will be waving the red flags from the roof tops. You would have to decide to either declare it as a gift (then no legal way of getting it back) or that it is a loan and this will then have to be done on the multiple for all those involved. Paperwork nightmare. IF you do this you need to make sure from a legal point you have a interest in the new place until you get it back. My bet is they would also come back at the 11th hour asking for more from you as they know you have it

Have they even put their house up yet to start the ball rolling?

They sound quite financially abusive tbh. Wtf?

I hope this isnt a scam your parents are being pulled into .I read about something that sounds very similar to this and it was a scam.
Advise your parents not to go ahead and don’t give them anything ,

@Chumleymouse

I agree with the above , I would lend my parents the money without doubt, Looks like most people on here value money more than family !!!!!

Looks like you haven't actually read the OPs posts or arent aware of the fact that not everyone has trustworthy parents or great relationships with them. There's no need be so smug, the OP can't make her parents be better peopl

I’d only go ahead if I was happy to give away £10k

Do they know that they have to pay 3x the stamp duty? Yes they can get the excess back but have they factored that in?

It’s a very bad idea. You need to let them know ASAP that you have thought it through and will not be lending the money. They sound passive aggressive and controlling.

Do they realise they will be clobbered for higher rate stamp duty? I think they may get a rebate if they sell within a certain period of time but they will still need to fund it upfront.

Sorry they sound like they live on a different planet. My parents wouldn’t dream of asking me to lend them money and vice versa.

I think only lend what you can afford to give, otherwise it'll lead to a lot of trouble. You clearly have no illusions about their behaviour or intentions, so to say you can't afford it after all is a good strategy.

No, we did this (22k) to my Auntie in same situation the amount of paperwork and personal questions and details we had to supply to be able to lend it to them was very intrusive, especially for my husband as it wasn’t even his family. They scrutinised our bank accounts. Finally got the money back over a year later and they didn’t even add a few quid on top for interest that they gained from it. We felt we couldn’t say no at the time because it was ‘family’.

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

They’re in this situation because they don’t want to do what the majority of the population do, which is selling your house before you buy another one.

So they are stubborn and immature then add your comments about manipulation, pressurising you for more money than you offered, careless about the risk you face and economical with the truth. It’s a total no, surely.

Some great ideas here about how to avoid this.

You sound lovely, OP so I am sorry you have two parents who would put you in this position. They sound all take and no give.