Money and MIL - advice needed (sorry it is quite long)

[shil0846]

This is more about my mother-in-law, however it is starting to affect my relationship with my husband and I would really appreciate some advice.

My father-in-law died last year leaving a lot of debt, but also a lot of valuable art work. My MIL also had a £15k credit card bill on which she was paying masses of interest. When she was widowed, she couldn't afford to keep paying the interest and was desperate. We therefore paid for the funeral and also took £15k out of our mortgage to lend it to her for 3 months to give her time to sell some of the art work. We are paying 4% interest on this.

11 months later she hasn't sold anything. I have sent pictures of items to auction houses to get them valued, but when I tell her what they say she tuts and says she paid far more than that and she wouldn't sell for such a low price.

The added complication is that I had a baby 6 months ago and we need the money back to buy a bigger place (we're in a tiny flat) and to fund my maternity leave. My MIL is aware of this (I have told her as plainly as I can without upsetting her). Her reaction is to apologize and say that she is ruining everything...yet she just doesn't sell anything. Most recently when I raise it she's started telling me how lucky I am to have had all this time with my DS, as she went back to work when my husband was 4 months old.

I generally have a good relationship with my MIL, but am starting to resent the fact that my family is suffering because we paid her credit card bill. I also feel duped. My husband gets really defensive when I mention it and reminds me that she's lost her husband and he's lost his father. So we end up arguing.

I know that the grief is still raw and suspect she doesn't want to part with any possessions she bought with her late husband, but I'm desperate to spend longer with my DS and could do so if she would only pay us back.

Any advice would be much appreciated.

Xx

[ModeratelyObvious]

I think it will be hard to put a charge on the house as the mortgage company will have to be informed. A charge over other items like the paintings may be better.

However - until MIL Dies, the only point on having such a charge is if you intend to call it in when the borrower defaults. Additionally, MIL will have to sign any such document.

[Lavenderhoney]

Another thing, is the easy assumption nothing will happen to you or your dh, like illness or death ( I hope not) , redundancy etc etc- think worse case scenarios. And if you did split up- not now or anything but who knows years ahead, you might be in a terrible position.

Has your dh got his head out of the sand yet?

[cleanandclothed]

Yes but even the discussion with dh about the charge puts things on a formal footing. And yes mil would have to sign it and the mortgage company would have to know - everyone needs to get serious about this. And you need to have a loan document and formal recognition of the debt so that in the worst case scenario you are a repaid out of the estate when she dies as a creditor.

[QuintessentialShadows]

"She has asked/told us that we have to take out a mortgage for her and she will make the repayments. She has said she cant bear to leave her home which is her "nest". She asked us before we lent her the money and we [stupidly] said yes."

Seems like she does not have much equity, so I suppose she has been living beyond her means for a long time.

Actually, I have a suggestion. Your MIL sell you the house to market value, and you buy it as a rental investment. You get a buy to let mortgage, and she pays rent. This way she gets to live in "her nest", she pays the mortgage payments, but YOU own the house.

[ModeratelyObvious]

Agreed that even if the loan remains unsecured it should be documented.

[ModeratelyObvious]

Quint, I don't think they will be able to do that though because they are trying to get a bigger mortgage for themselves.

And what are the odds of MIL defaulting on rent...?

[QuintessentialShadows]

Moderately, a buy to let mortgage is based on the value of the house and the rental income potential. It will be seen as a stand alone and not connected to OPs salary and the mortgage on her home.

You need to see a specialist mortgage adviser who can advice you on both these things.

Any equity in the home will then be released to your MIL. She can pay you back your 15.000 with the 4% cumulative interest, and possibly have a tidy sum to live on.

You will however have bought the house your dh and his brother stood to inherit, so may have to come to some agreement that she pay your dh and his brother a little "advance in-heritage". You can use this to increase your deposit on the bigger house you plan to buy.

You cant just pay the mortgage on her house, just for the house to later be split between you and brother as inheritance. This way you will never get back the investment you have made on the house, and your bil gain the most.

[ModeratelyObvious]

But isn't it still a debt that OP and DH are liable for and would therefore make it harder for them to get a bigger mortgage of their own?

My worry as well would be MIL's attitude - if she believes her son "owes her" these things, she may just default on the rent and would DH then have the stomach to evict her?

I agree it's worth talking to a mortgage advisor though.

[QuintessentialShadows]

Not necessarily with a buy to let investment where the tenant will pay the mortgage, not the landlord. The mortgage is based purely on the rent income. The lender will send a surveyor around that will look critically at the market, the rent which can be expected, and base the mortgage offer on that. It has to be self sustained.

[QuintessentialShadows]

"she may just default on the rent and would DH then have the stomach to evict her?" - If she defaults on the rent and dh defaults on the mortgage repayments as a result, the house could be repossessed and mil forced to move.

[ModeratelyObvious]

Also, MIL may not be able to afford market rental rates as she's currently paying interest only. Though she'd have more free cash after clearing her other debts, of course.

[QuintessentialShadows]

We were recently thinking of buying a rental investment and spoke to a mortgage adviser about both buying a rental property (the one in question was not a good choice because it required a deposit of 50% of the house value for the mortgage payments to be small enough to be market rate for the type of house in the area it was in). The adviser said that we could easily move to a larger house as the equity in the house would be counted as deposit and our income towards the size of the mortgage. It was a separate calculation to the possible rental investment entirely. We did not do any of it in the end, but it was illuminating.

[QuintessentialShadows]

She may be able to pay market value rent if she has released equity from the house - if there is any.

But to be honest, I would be hesitant to enter into any financial entanglement with her as she seems spoilt, entitled and without financial and moral sense.

[Bogeyface]

I wouldnt rent her the house because she is no more likely to pay rent than she is the loan or the mortgage repayments as soon as there were not in her name.

These suggestions only work if you are dealing with a reasonable person, and this is not a reasonable person. She refuses to deal with her debts, refuses to deal with her spending and is happy to use her son, DIL and DGC money to fund her lifestyle while they go short.

This is not someone that you can trust to do the right thing at all. So buying the house from her and renting it back would cause even more problems than they have now.

[expatinscotland]

I would tell your husband there is no way I will be funding his mum for a penny more. None. Zero. If he doesn't tell her you will. I would separate my money from him entirely and actually, I'd make plans to leave before he ruins you financially behind your back.

[Blu]

As if this woman would pay any rent!
No way.

I wouldn't be at all surprised if interest rates haven't risen by the time MIL's current rate runs out. So the interest-only mortgage will be an even more expensive and wasteful deal, and she won't be able to pay it.

You may well want / have another child within 2-3 years - and your living expenses and need for another home wil be even more under pressure.

She has £55k worth of debt (incl your £15k) and an interest-only mortgage on a big house. She is living well beyond her means, and obviously always has.

I think you and DH should lay it all out on papaer - the impact on your finances and own lifestyle, how much her house is costing her, how much her debts are costing her - and then show her another spreadsheet showing how much 'disposable' she would have in a smaller house with the debts paid off.

I would share all this info with the BIL, too and get him onside - after all it is his inheritance too that is disappearing into the big pit of interest payments,' and it sounds as if he could do with a wake up call over the impact on you and the way you cannot continue to act like the family's treasure chest.

Totally iniquitous that you would cut your maternity leave and be trapped in a small flat to fund her indulgence to live in a massive house.

[Minifingers]

How much are the repayments on 15k if you have added it to the mortgage? By my calculation on interest only over 10 years that works out at about £12 a week?

Are you really hard up?

[Phineyj]

If you live in London, school choice when your DS is 4/5 is likely to be an issue. If things carry on as they are you may neither be able to move out of London where the school choice is better, nor be able to afford to go private. Run that one by your privately educated DH and see if he thinks he can live with that. Does he want more DC? Does he see how that is made very much more difficult by this situation?

I do think you should do your utmost to get DH and DBIL to get her to see sense. If she has never dirtied her hands with financial planning, she may be one of those women more likely to take advice from a man. I don't think your involvement is helping as she doesn't take you seriously.

I feel for you as my DGM was like this although she was not in debt, and my DPs were always on the same page re what was best to do.

I think you may have to try to convice your DH to go to Relate or similar with you if he will not discuss this seriously. Money breaks up marriages.

[Phineyj]

Mini I think it's more the looming issue in 3 years that's the concern? Also I think it would be near impossible to write off a family member costing you £15k without any bitterness. That is going to make the issues that arise in future even harder to deal with.

Although I could also imagine this person spending the rest of her badmouthing 'evil' DIL who 'made her' sell her house and paintings .

[Phineyj]

There was meant to be a 'life' in there .

[expatinscotland]

Obviously she is hard up if contemplating selling jewellery.

Since your h is such a wet girl's blouse, you are going to have to get tough because this woman will not change.

Your h can't borrow off his own back, he needs your income, too, so you say no. And separate all your money. Use a joint account you pay bills into so he can't use your money to fund his toxic, abusive mother.

I'd go back to work, so I could rent out my own flat and leave him to it, tbh.

You are stuck with that £15k debt, though, she will never pay it back.

[CupOCoffee]

Mini.

15k less in equity in the ops home will make all the difference when she tries to buy somewhere bigger. Its like someone taking her 15k deposit out of her pocket!

[Minifingers]

"15k less in equity in the ops home will make all the difference when she tries to buy somewhere bigger. Its like someone taking her 15k deposit out of her pocket!"

If they simply can't buy their next property without the return of their 15K, and they need to move, they are going to have to force the issue. The thing is, the OP doesn't actually give a lot of specific figures about the equity they already have in their own property, and what they need to move, so it's hard to know.

All I do know is that adding 15K to your UK average 100K mortgage repayments makes only a small difference to the size of your monthly repayment, so I really don't understand the level of anger the OP is experiencing. The 15K that the mother in law has borrowed was not going to be taken as a lump sum on the mortgage to fund the OP's maternity leave surely? Because if she's talking about the the actual monthly repayment on 15K - well, as a contribution to funding someone's maternity leave it's a drop in the ocean surely?

A year after the death of my father my mother was still in a state of paralysed shock and depression. 4 years on, she's just starting to come to terms with the reality that she may at some point have to sell the family home, if my sister (who lives with her and is currently covering some of the many expenses) decides to move out. But it has taken her a loooooong time to get to this point.

[Minifingers]

"Of course she paid for her son's education, that's what parents do."

I wouldn't impoverish myself to pay for my children's education.

State education is free for under 18's.

When it comes to university students can borrow money and work, and pay off their debts once they start earning. The OP's DH has had a HUGE and completely unnecessary hand out from his parents, that they could obviously not afford to give him, while at the same time funding a debt free retirement.

I think the MIL is right to remind the OP of this. There are thousands of families in the OP's position still paying off student loans.