I don't know what to do for stepson

[Doone22]

I really don't know what to do - my stepson is mid thirties, married, living in London, working as a contractor on a very good day rate but he's had issues with his credit score and a year ago put down his inheritance from his grandad (£50k) on a new build. The property is now built and he needs to complete next month (£108k) but he's been rejected for mortgage and as I understand has tried a few different brokers.

He's been told that a family member could do it instead but I have literally just remortgaged and can't afford another one on top of my recently doubled monthly payment, nor do i want to put my house at risk.

I suggested I take my pension pot (only £40k) if he could find the rest elsewhere by getting some off all other family members and a small loan, etc
His dad is dead, his mum is a hippy living abroad somewhere but he has aunties and cousins I think but I just feel I need to help him out here with a short term loan. But on the other hand its his mistake, he's a grown man, he's young, fit, hardworking, healthy and earning ok so should I even make that offer?

Also on the table is we are both trustees for my son (17) and the money in his trust fund would cover it but I'm not even sure its legal to invest in this for a year yet alone possible..

WWYD?

No dont give him your pension that would be a bad move and dont even think about giving him your child's trust fund thats illegal. Hes not going to be able to pay all that money back in a year with bad credit your not being realistic at all op.

Agree with pp. He would have needed a mortgage offer to exchange on the new build, so whatever has happened is obviously very recent too- not like a historical mistake that is lingering over him. Has he definitely seen multiple brokers? That is a low level of borrowing for a good earner, the situation must be dire to be a dead end. I would lend emotional support, attend a broker meeting etc if it might help him, but no way would I be risking anything financial. Has he definitely put the whole 50k down- usually on exchange you would only put 10% so he might be able to get some back even if he pulls out of the purchase

There's a lot there...

he's had issues with his credit score
Why? Has he defaulted on debt?

Put down his inheritance from his grandad (£50k) on a new build. The property is now built and he needs to complete next month (£108k) but he's been rejected for mortgage and as I understand has tried a few different brokers.
What went wrong in between putting the deposit down and finalising his mortgage? Did he not get a mortgage in principle before paying out his £50k? Has he tried brokers or just high street banks?

He's been told that a family member could do it instead
His wife? Where is she in this?

I suggested I take my pension pot (only £40k)
You can't just take your pension pot. You can take 25% of it if you're 55 or older and haven't taken the tax free lump sum yet. Pensions work differently to savings or investments. The money is tied up. If you literally wanted to give him your pension you'd have a massive tax bill to pay out of that £40k. Besides, giving him money would be a terrible idea. He doesn't sound financially responsible or financially intelligent from what you've written. You wouldn't get the money back easily or at all and you'd risk your relationship with him.

Also on the table is we are both trustees for my son (17) and the money in his trust fund would cover it but I'm not even sure its legal to invest in this for a year yet alone pos sible..
No you can't do that. Your 17 year old can't consent to that and you are trustees to manage his money in his best interests.

Ridiculous sorry don’t give him your pension that’s insane.

his finances are pretty shocking if he cannot get a mortgage for £108k working in London.

i think he needs do have with his wife. Perhaps her family will help them out.

if not some tough decisions will have to be made.

Absolutely do not gift your pension or take money from your son’s trust!

this is insane. He needs to sort it out.

And he’s a cheeky fucker if he has considered these options.

how embarrassing, yeah my house was literally bought by my grandad and my step mums pension and half/step brothers trust fund.

embarrassing.

It’s nice of you to try and help but if he’s bad with money, would you ever get it back? I’ve been in debt and do understand how tough it is but it’s so much money for you to lose.

Do you have any proof he has been refused a mortgage? He must have had one to take out the contract to buy the property in the first place. What changed? You can help him try to find a mortgage lender - maybe he hasn't gone through a broker and there are other options but not much else. I absolutely would not give him your pension (you can't give him that without paying a lot of it away in tax if you take it all at once so you couldn't give him the full amount) and to take your son's funds is illegal. He has a wife too - what is she and her family doing to help resolve this? I'm afraid I would let it fail if that is the only other option.

There’s something not quite right with this story.

Definitely don’t give him any money, loaned or otherwise.

Something isn’t adding up here. £108k plus his £50k deposit totals £158k, you can’t buy a garage in London for that price, let alone a new build. Does he already own a house and has equity in that? Surely if he’s married they could obtain a mortgage in both names, or just in her name, you’d only need a salary equivalent to the minimum wage for that amount. Don’t get involved, if his credit rating is really that bad you will never see the money again.

God no, don’t do any of this.

He should have had mortgage applications sorted long before this if he’s had credit issues in the past. He needs a specialist broker

Try other brokers, tell him to get his credit record and see how he can improve it.
Don’t use your pension.
Don’t loan him money or use any other of your money.
Do you think he could manage a mortgage?
Is this a shared ownership property.

'oh dear, I'm sure you and your wife can work something out.'
Don't take a single penny from your pension or your child's money.

Do not touch your pension. For a million reasons - just don’t.

You can’t use your son’s money for this. Even if you control it, you legally need to do so in your son’s interests - which doing this would not be.

He's put down a deposit of £50k and still can't get a mortgage of £108k.

How sure are you that's true and he's not just after the brother's trust fund?

This would be what my Grandad used to call sending good money after bad.

If it's true it's a difficult situation of his own making, which your £40k isn't going to solve anyway.

There are specialist brokers for those with difficult/complicated financial circumstances. We used Haysto (not for bad credit, but due to complicated finances) and found them really good, although they do take a hefty fee.

I agree you can't buy a hous in London for £158k

If you took your son's money that would be stealing. Don't do it. Go to see a broker with him.

DO NOT TOUCH THE TRUST FUND.

You could end up with much bigger legal issues down the road.

All sounds very unbelievable OP. Do NOT give him any of yours or your wine money

Where do you find a house for 158k in London ??

I suspect the £158k is the shared ownership price and they will be renting the other X%.

However there's a lot of missing information eg where are they currently living, what they're actually earning, what their disposable income will be, why his credit rating is poor, how they manage their money, prioritise essentials vs discretionary spending and how reliable his income is.

It could also be that he doesn't manage his finances and insecure income well so doesn't save to cover his tax bill and periods between contracts but spends like a millionaire when he should probably be saving a significant part of his income.

Which means that any help you provide should be advice, hand holding only because even if they didn't earn much, they'd qualify for a mortgage and the fact that professional mortgage lenders who have access to all their finances will not lend them a relatively small amount of money secured on a property when they have a good deposit because it's not worth the risk to them should tell you that you'd be very unwise give them any of your money too.

The other reason could be that the flat is not mortgagable for some reason eg due to the likely shared ownership, not worth the price they're paying, build quality, lease terms etc.

Also, they're adults, what have they done to help themselves with their situation? They put the deposit down a year ago so could have been saving towards the mortgage they're going to have to pay. Decent earners spending a year living frugally could have paid off any debt and saved a significant five figure sum in that time towards their new home.

Don't go throwing good money after bad.
He over committed, and if he can't scrape up what he needs now , what does he do on five years when rates go up again?
What happens when he needs repairs, or insurance doesn't cover something?

He needs to try again with more brokers/personal loan or accept it isn't happening.
Either way, he is a grown man earning well, he can figure this out for himself.

I agree with most of the others. He's a grown man. Let him handle his own financial problems. Do not put your and your minor son's future at risk to bail him out!

People have bad credit scores because they don't pay their bills.

And you want to gamble your retirement and your DCs trust fund? This has to be a wind up surely.

Please don’t do this.