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?

[TatianaBis]

That was to @ThinWomansBrain ^

[finallymightbehappening]

I would give him 2.9%. That's about as cheap a personal loan as you would have got over the period and would have been a respectable return in the time period too. No idea what the people that are saying you have to work it out as a percentage of uplift in the house. What are they on. Some people talk shit.

If you were feeling generous you should give him 5% - then he has beaten the market.

[whippetwhappet]

Ffs - why do people have to be so dramatic and holier than thou. The OP's son hasn't lost any money.

OP have a look at past performance for some cautious funds and apply to the £10k.

Your son will still be better off as you're not factoring in ten years worth of product/fund charges or cost of advice (assuming you would have contacted an advisor).

Calculating overall property increases and enhancement is just mental.

[Workyticket]

4% = £16010

[meadowbreeze]

@Howdidigetsoold if her house is in London or the SE than yes, the loft makes a difference but property prices have sly rocketed in the last 12 years, loft or not.

Tbh op sounds like a lovely parent. She could've easily just said the money was spent on your room. End of.

[PattyPan]

Unless DS is going to buy within the next year (which I’m guessing is unlikely given his age) then a Lifetime ISA would be better than HtB. You can’t put £10k straight into either of them so it would need to be fed from another ISA or savings account over a couple of years.

[CassandraTrotter]

Pmsl - base rate has been historically low for years - while property has increased in value so people saying you’ve done the wrong thing obviously have no idea how money works
But op has absolutely no intention of giving him the result of his investment.

[sweeneytoddsrazor]

Is the grandparent also the grandparent of DSS? If so did Dss get it and what happened to his.

And although the house price may have rocketed, what if you were unable to remortgage, had needed to move earlier or something. It is not as low risk as a savings account. So effectively you were taking a risk with his money.

[Darbs76]

Chill out people. Do you think it would be better sitting in an account all these years and the son having to share? He’s not losing out so what’s the problem?

[TatianaBis]

No idea what the people that are saying you have to work it out as a percentage of uplift in the house. What are they on. Some people talk shit.

No-one is saying she has to.

Another way to do it is simply figure out what % of the equity 10k amounted to at the time and what that % would be worth now.

[Spidey66]

@osbertthesyrianhamster

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.

Are we reading the same post? I've read and reread but can't see anything about a new man?
I see about a stepson but I understood the stepson was also father in laws grandson, ie the OPs partners child?

[JassyRadlett]

God no, he's not getting that much! The value of the house has sky rocketted! I just need to work out how much it would be worth if I'd bunged it in a Junior ISA or something lame!

I was with you right up until this.

You invested his money in your property. That’s capital that means your interest payments have been lower over that time. You’re being dishonest if you don’t release the increase in value of his investment. So the value before it was invested, how much 10k is as a % of that. Then the value now, and the % of your house that his investment represents is what you owe him if you’re being honest with yourself and him.

If you’d invested it in stocks and shares that skyrocketed due to lucky investments, would you take the remainder of his interest that was over a basic shitty junior isa rate?

You invested his money in bricks and mortar. You benefited financially from this investment - in terms of not having to borrow and pay interest on that 10k.

You will also have benefited financially from the increase in value on your house from having an extra bedroom which is generally the best way to increase a property’s value.

Your ‘but he got a cool new bedroom!’ is neither what the money was given for nor is it usually how a parent thinks about their child’s living space - you pay for that, not him.

If you’re not willing to treat this as an honest investment, At the very least figure out what interest you would have paid on the mortgage over that period for the 10k - so how much you saved. You owe him at LEAST that much.

[tttigress]

@Unsure33

See web page RL 360

If you put an average of 4% it’s about £ 14850

This sounds ok toe, as the interest rates on cash were very poor at this time.

[GappyValley]

The hand wringing on this thread! An actual allegation of fraud as well
There are some seriously hard of thinking people on here

As others have said, the best he could have had in a passive investment would have been 5% tops
Slightly more under active management but that would have incurred fees

£10k compounded at that rate gives around £15k now, which is an excellent gain for DS doing absolutely nothing while benefiting from a lovely room
Win/win all round

[CandyLeBonBon]

@JassyRadlett

God no, he's not getting that much! The value of the house has sky rocketted! I just need to work out how much it would be worth if I'd bunged it in a Junior ISA or something lame!

I was with you right up until this.

You invested his money in your property. That’s capital that means your interest payments have been lower over that time. You’re being dishonest if you don’t release the increase in value of his investment. So the value before it was invested, how much 10k is as a % of that. Then the value now, and the % of your house that his investment represents is what you owe him if you’re being honest with yourself and him.

If you’d invested it in stocks and shares that skyrocketed due to lucky investments, would you take the remainder of his interest that was over a basic shitty junior isa rate?

You invested his money in bricks and mortar. You benefited financially from this investment - in terms of not having to borrow and pay interest on that 10k.

You will also have benefited financially from the increase in value on your house from having an extra bedroom which is generally the best way to increase a property’s value.

Your ‘but he got a cool new bedroom!’ is neither what the money was given for nor is it usually how a parent thinks about their child’s living space - you pay for that, not him.

If you’re not willing to treat this as an honest investment, At the very least figure out what interest you would have paid on the mortgage over that period for the 10k - so how much you saved. You owe him at LEAST that much.

I quite agree. And a cool new bedroom is no good to an 18 year old who will presumably be moving out in a reasonably short space of time, and who has no say on what the op chooses to do with her house in the future. So a very transient benefit at best.

[TatianaBis]

Did FIL also give SS 10k?

[Gilly12345]

I would give him £11,000 and move on, you did the wrong thing in spending his money and saying he will inherit when you croak is daft and irresponsible as no one knows if they will inherit due to care home charges etc.

[TatianaBis]

I quite agree. And a cool new bedroom is no good to an 18 year old who will presumably be moving out in a reasonably short space of time

By the sound of it she did the bedroom years ago.

[IceCreamAndCandyfloss]

I see about a stepson but I understood the stepson was also father in laws grandson, ie the OPs partners child

So only one childs money was spent? A child shouldn’t have to fund their own bedroom and the money shouldn’t have been touched if gifted to the child. Keeping it secret from the FIL was awful.

[TentTalk]

@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.

Very, very short term. Over most terms (shortish to long) property increases in value. It's a low risk investment over 12 years.

[KarmaStar]

Whatever you argue,it was not your money to spend and you should be honest with fil and ds.
Morally ywbvu.
But you are one of the posters who start a thread in Aibu whilst not believing for one entitled minute that you are.

[CandyLeBonBon]

@TentTalk the op has stated that the property Amur has skyrocketed

[ShoebillStork]

“Financial pickle” downplays it a little, no?

Well, I don't think so ... I've got a small mortgage on a house that's worth quite a bit (thanks in part to my savvy investment in a loft conversion turning my 3 bed house in a desirable area into a 4 bed house). Can easily afford repayments if I release, say, £15k to give DS money from his grandad.

[TatianaBis]

I think somewhere between 15-20k would be fair.

Assuming though he won’t fritter it - I would ringfence it as a property deposit.

[GappyValley]

@IceCreamAndCandyfloss

I see about a stepson but I understood the stepson was also father in laws grandson, ie the OPs partners child

So only one childs money was spent? A child shouldn’t have to fund their own bedroom and the money shouldn’t have been touched if gifted to the child. Keeping it secret from the FIL was awful.

If the money hadn’t been touched, and had sat in a low interest account, the son would be getting less than OP will be paying if she calculates the potential interest from ISA hopping

So he will be worse off acting as if the money shouldn’t be touched
🤦‍♀️🤦‍♀️