To ask for help with financial pickle

[ShoebillStork]

In 2009 FIL had a win on the Premium Bonds. He gave us £10,000 to invest for DS (at low risk) and the money to be given to DS when he's 18.

I put the money towards a loft conversion. DS is 18 soon and I'm due to remortgage for a better rate. How much do I need to release for him so he gets the £10k plus what it might have gained in interest since 2009.

And should I encourage DS to get a Help to Buy ISA with it?

so you spent his money? Is FIL aware this is where it went?

Try this calculator www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

@0None0

so you spent his money? Is FIL aware this is where it went?

Arguably, putting it into the house is investing it though, and as the house will have gained value that will give a higher return, surely?

Can't help with interest calculations but given you happily spent his money on something else you have absolutely no rights to advise him what to do with it.

www.moneysupermarket.com/loans/calculator/

Try working it out on this.

@0None0

so you spent his money? Is FIL aware this is where it went?

back at ya!

The loft conversion meant DS didn't have to share his room when DSS stayed over. It also added a lot of value to the house, so I can release the £10k plus interest that would have accrued.

I would be honest and let him know where the money went. If he doesn't need it right away, wait until you can release the money when he needs it.

Remortgaging 10k while he doesn't need it right now seems a waste on interest payments.

Yikes! Does FIL know what his gift was spent on? What does DH say? I can see you're going to get the money back for him, and he won't have lost out financially. But there are so many variables where his windfall could have been at risk because of how the £ was used.

But to answer your question, there are online calculators that will tell you what £10k would be worth now if invested at x rate of interest.

A help to buy ISA might be a good idea, but perhaps it would be worth your DS doing his own research and deciding what to do with the money based on his own life plans.

This smacks of fraud. You are borrowing to pay back what you should have put aside for your son. What if you can’t get a loan? What if you get the loan but can’t make the payments?

@ShoebillStork

In 2009 FIL had a win on the Premium Bonds. He gave us £10,000 to invest for DS (at low risk) and the money to be given to DS when he's 18.

I put the money towards a loft conversion. DS is 18 soon and I'm due to remortgage for a better rate. How much do I need to release for him so he gets the £10k plus what it might have gained in interest since 2009.

And should I encourage DS to get a Help to Buy ISA with it?

You need to work out the value of the house before and after the loft conversion, calculate the change in value, work out the proportionate value allocated to the 10k and then add 12 years interest on top.

At least that's how I'd approach it!

Arguably, putting it into the house is investing it though, and as the house will have gained value that will give a higher return, surely?

It is hardly the low-risk investment OP's FIL intended. There are periods when residential real estate loses value, which may preclue a cash out refinancing.

@MissConductUS

Arguably, putting it into the house is investing it though, and as the house will have gained value that will give a higher return, surely?

It is hardly the low-risk investment OP's FIL intended. There are periods when residential real estate loses value, which may preclue a cash out refinancing.

A 12 year investment in property is relatively low risk

You spent his money without his or his grandfather's permission to enable your lifestyle with a new man and now you want to control what he does with the amount you borrowed?

Help to Buy is a total con.

You can't control what he does with the money. I hope he never finds out what you did.

Meh. Yeah you did a bad thing- but are obviously undoing it.

So looking on Barclays, the best ISA I can see had an interest rate of 0.25. Upping that to 0.3% to atone for your guilt, say £10,300

Good luck!

Thanks for link Candy but I don't know what interest rate to put in.

And can you lot stop trying to make out I've nicked DS's money. He got a cool bedroom (his words), will get £10k plus interest and will inherit the lot when I croak. Which will be very soon if FIL finds out ...

I suppose you could give him the difference in the value of the house his money created, or his £10,000 + 12 years worth of interest, whichever is greater.

How much was the house worth when you added the 10k?

What percentage of the value was that then?

You should get the house valued and then the same % is what you owe your son for the money you used.

My parents wouldn't be fussed either way if we had done this. You're going to give it to him with interest, so what's the issue?

Re not knowing what interest rate to put in, why not use the average loan interest rate? About 4.5% according to Google

@ShoebillStork

Thanks for link Candy but I don't know what interest rate to put in.

And can you lot stop trying to make out I've nicked DS's money. He got a cool bedroom (his words), will get £10k plus interest and will inherit the lot when I croak. Which will be very soon if FIL finds out ...

🤣🤣🤣🤣🤣

You can try this calculator for historic investments financial-calculators.com/historical-investment-calculator

Interest rates have been very low since 2009. If you were really impressive and kept completely on top of switching then you might be able to get 2% - 3%. I’d go for 3% as your son has unwittingly taken r more risk than if the money was in the building society.

10,000 * 1.03^12 = £14,257.61.

As other's have commented, it's the increase the improvement put on the house in 2009, uplifted to current values that should be paid back.

Here's a house price increase calculator:
www.nationwide.co.uk/about/house-price-index/house-price-calculator

Here’s another one www.swanlowpark.co.uk/savings-calculator

“Financial pickle” downplays it a little, no?