Lent DD money, now it's causing problrms

[Baabaablackshee]

Four years ago I lent DD (now 29) 100% of the cash to buy a 3 bed house.

The plan was that she would have lodgers to help pay the mortgage and after five years (when hopefully she would be earning enough to remortgage with a commercial lender) she would pay me back.

I am approaching retirement and the money will go towards my pension pot

DD struggled with social interaction and has recently been diagnosed with autism. She is also on medication for anxiety and depression. Lockdown exacerbated her poor mental health and she and hasn't held down any job for long.

With the hike in mortgage rates, it is unlikely that she will be able to remortgage and pay me back without selling the house at the end of the original five year term.

She seems to fall out with her housemates all the time. She wants to move to a smaller property where she doesn't have to share, but she can only do this if I continue her mortgage at the previous low rate of 2%. (I will lose out because current mortgage rates are around 5%.)

I'm reluctant to do this because I don't want to have to rely on her for part of my income in retirement.

If I pull the plug she will have to rent a room in a house share like many people her age. If I don't, I lose out. She has built up some equity but not enough to buy anywhere without a mortgage.

I now regret entangling our finances. I want to help her but not at the expense of my financial future.

WWYD

didn't you confirm to the bank that your 'loan' is a gift?

if so you don't have s legal route to get the money back.

I hope you have a written agreement, or that the house is in your name.

Is she paying you back anything at the moment? If not what's she doing with her money? I am assuming that she is in paid employment?

She can apply to the HOLD shared ownership scheme via advance housing association for a flat on the open market for herself. No lodgers needed then. They will sort out a mortgage based on her benefits, assuming she gets them. I have done this through them and it's worked well
. Service charges and rent are sorted by them through the housing element of uc

Apologies Op I can see from your post that your DD has problems around staying in paid employment.

The house is in her name but the mortgage is registered in my name at the Land Registry.

Yes she's paying me monthly interest via direct debit.

How???

Or do you mean you lent her the total price and have a charge against the property rather than a mortgage in your name so in effect you are the lender with the benefit of the charge.

What does your loan agreement state and are you prepared to pursue an order for sake through the courts if she doesn't want to sell if your loan agreement allows it?

I'm the lender.

She wants to sell, the issue is where she goes next.

You provided your daughter with a mortgage?

Thankyou, I'll look into this.

Yes

Are you a bank OP?

So you lent money for the house and she’s paying you back with interest? And you agreed she would get an actual mortgage after 5 years and pay you back but now with interest rate rises she may not be able to?

Yes

Crikey, very generous of you OP but this was always going to end in tears I think. You would be wise to seek specialist legal advice I think but ask to move this to the legal matters section in the meantime. Good luck!!

Were there no clues about your dds neuro diversity and difficulty in every day life before you offered to help her out?

Thanks, but the issue isn't legal.

She's wants to sell the house but rather than pay me back all the money, she wants me to use some of it help her to buy something smaller.

I'm reluctant to do so, because this arrangement has caused some bad feeling between us.

If anyone has been in a similar situation I'd like to know how they handled it.

No, you are ready to retire soon so she needs to sell the house, which she agrees to, and then get something that she can afford herself without your help.

How is she paying the “mortgage” if she doesn’t work?

Well I guess your options are to do as DD suggests and buy a smaller home that is easier for her to manage if she can't manage this one. Sell this one and tell her she's on her own. Let her move in with you.

When you chose to do this there was always the risk something could go wrong, she could have been in an accident, seriously ill or, as is the case have a disability. The autism would always have been there, it's not new and possibly one of the reasons you decided to go down this route for housing in the first place even if you didn't know exactly how she was different.

My parents did something similar after an inheritance and bought me a small flat for myself and DD, 0% interest with a declaration of trust re repayments. We set the repayments low enough that even if something happened and I ended up needing benefits that I could continue paying them back.

With the lodgers, presumably.

The problem is that if she hates having housemates and wants to live alone, paying off a mortgage on any new property will be difficult.

Thank you.

Your answer helps me understand that this is the right thing to do. I just feel bad for her, but I can't act against my own best financial interests out of guilt.

This is really helpful, thank you.

She has lived we me in the past but it didn't work out so I'm not going to repeat that.

@Baabaablackshee I think you should sell the property and your daughter should repay the money to you, it was very generous what you did for her but I think it's reasonable she has to adjust to providing for herself whatever that may look like (in reality many people in their 20s aren't always satisfied with their living arrangements) so that you can go into retirement with peace of mind