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Parents And Grandparents Helping Out

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Had a conversation with my sister in law recently, mentioned that my niece sort of expects by birthright that her Mum should somehow find a lump of money for her to put down as a deposit. Then searching on Google this morning I find this http://www.parentaidnow.com/parent-aid-now-about-us.htm :o

I just do not get this at all, Granny guarantees mortgage, little Jonny defaults due to high cost of mortgage, Granny loses property. Granny remortgages to give Jonny 20K dipper, Jonny still has to pay the re-mortgage cost and his own mortgage, expensive solution.

These potential products do spread the risk, but also increase the risk for another party. Particularly in light of the fact that so many will have to use the equity in their home to eek out a living given the miserable future returns on their pension.

I`m trying to think how I`d react in 10 years time if my then 22 yr old daughter asked me to re-mortgage or guarantee a mortgage that she obviously couldn`t afford singularly. I would hope she could stand up on her own two feet and be responsible for herself. Infact I`d be gutted if she asked, or if my other two did. The last thing I would expect is that she would be that desperate to purchase she would expect her parents to take on debt and risk on her behalf.

Sorry to go all grumpy old man.

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Guest The Dude

Had a conversation with my sister in law recently, mentioned that my niece sort of expects by birthright that her Mum should somehow find a lump of money for her to put down as a deposit. Then searching on Google this morning I find this http://www.parentaidnow.com/parent-aid-now-about-us.htm :o

I just do not get this at all, Granny guarantees mortgage, little Jonny defaults due to high cost of mortgage, Granny loses property. Granny remortgages to give Jonny 20K dipper, Jonny still has to pay the re-mortgage cost and his own mortgage, expensive solution.

These potential products do spread the risk, but also increase the risk for another party. Particularly in light of the fact that so many will have to use the equity in their home to eek out a living given the miserable future returns on their pension.

I`m trying to think how I`d react in 10 years time if my then 22 yr old daughter asked me to re-mortgage or guarantee a mortgage that she obviously couldn`t afford singularly. I would hope she could stand up on her own two feet and be responsible for herself. Infact I`d be gutted if she asked, or if my other two did. The last thing I would expect is that she would be that desperate to purchase she would expect her parents to take on debt and risk on her behalf.

Sorry to go all grumpy old man.

I have an aquaintance who told me last night that he has received a repossesion order - he was 2 months behind his mortgage payments. House cost 125k. He has been in it for about 8 months. He lives with his girlfriend and they have a 2 year baby girl. His dad mewed to give him a deposit for this house. What happens now? I don't know. I am hoping that my aquaintance sorts something out - he seems like a good chap but crap with money...but I just get the feeling that buying a house compounded his problems. I think people forget the golden question: can I afford it?

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ParentAidNow.com has been set up to help parents – or grandparents - help youngsters take their first step onto the property ladder.

With house prices higher than ever and the desire to be home owners built into our culture, the need for inventiveness and help has never been greater.

I'm lost for words at this point.

I am frequently asked to comment on housing and issues for first time buyers in the media and FirstRungNow is frequently referred to as the best source of information to help first time buyers.

:blink:

Do let me have your comments or news.

I could, but I'm in polite company.

Helen Adams

Managing Director

ParentAidNow.com, FirstRungNow.com, FirstRungNow Ltd

Helen @ParentAidNow.com

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I'm sure I read recently that something like a third of recent FTB's are turning to their parents/relatives for the deposit.

If you can't afford to save for the deposit what chance paying back the full loan?

Madness.

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I think the whole idea sucks. If you can't afford it don't buy. If you save up a deposit yourself and still can't afford then don't buy.

If you can't save then you shouldn't be buying a house.

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I think the whole idea sucks. If you can't afford it don't buy. If you save up a deposit yourself and still can't afford then don't buy.

If you can't save then you shouldn't be buying a house

how can people save when the houses have risen 20% a year for the last 3-4 years.

that amount is more than people were earning each year.

that leaves a lot of people unhomed - and that for 2005 is not good enough.

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If you can't save then you're spending everything you earn. If you're doing that you need to work out what the problem is - whether you need to spend less or earn more or both.

Just because house prices have risen shouldn't stop people saving.

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If you can't save then you're spending everything you earn. If you're doing that you need to work out what the problem is - whether you need to spend less or earn more or both.

Just because house prices have risen shouldn't stop people saving.

Wow! Such words of wisdow I have to say. I'm actually worse off each month now that I'm renting, because my deposit reduced the size of my mortgage.

Edited by Matt

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Wow! Such words of wisdow I have to say. I'm actually worse off each month now that I'm renting, because my deposit reduced the size of my mortgage.

Oh you're renting badly then?

If you need someone else to pay the deposit you're financially inept enough to screw things up elsewhere along the line.

Houses need maintenance - and you should save for a repair budget as well as having an emergency rapri fund too. Plus you'll have buildings insurance to pay for too.

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If you need someone else to pay the deposit you're financially inept enough to screw things up elsewhere along the line.

No, I'm very financially astute thank you, I just don't earn very much. There is a difference between this and being 'inept'.

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I think the whole idea sucks. If you can't afford it don't buy. If you save up a deposit yourself and still can't afford then don't buy.

If you can't save then you shouldn't be buying a house.

I have to say I agree.

Before I get hammered by those who are on low incomes, let me tell you about my Mum. She is in her late 50's, a Nurse for nearly 40 years. The highest salary she has ever earned is what she earns now, £12,000pa, yet for the first few years she worked, she gave 1/2 her salary to her Mum (who at the time she didn't even live with). When she was in her late 30's she realised that the goverment weren't going to give her a decent pension, she had to save a huge chunk of her salary so she wouldn't have to rely on me and my brother in her old age (very wise considering my brother's track record). But the most important thing to consider about my mum is that, mortgage aside, she has never been given money by or borrowed money from anyone. Her rule was, if you couldn't afford it, then you can't have it. We grew up in secondhand clothes, with secondhand furniture, a car we only used when it was needed. My mum bought her first new sofa 2 years ago. Some may not like thisway of living but that is how she could pay her mortgage after my Dad left and save for retirement. A lot of people may say that things are different now, but to be honest I don't think they are, I just think that too many people feel they are 'entitled' to things that are IMO luxuries.

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how can people save when the houses have risen 20% a year for the last 3-4 years.

that amount is more than people were earning each year.

that leaves a lot of people unhomed - and that for 2005 is not good enough.

Hi RFD,

I agree that's unacceptable, the answer IMO is that the prices must come down not that we must borrow from our parents (who in turn have to borrow from the bank). I know, such wisdom from someone so young and beautiful? (OK I'm pushing it with the young).

A question: Would house prices be so high if everyone had stuck to sensible ways of borrowing?

If no one can afford homes and they don't go to extremes to borrow, then the prices have to come down? BTL is dead IMO, people around here can't sell there houses because they're too expensive, normally this would mean rents go up. The opposite has happened, rents are coming down, there are too many BTL's. Sooner or later BTL house are going to be up for sale in a market that is already struggling.

LG

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...rents are coming down, there are too many BTL's. Sooner or later BTL house are going to be up for sale in a market that is already struggling.

LG

You can tell this just by looking at the pictures on www.rightmove.co.uk or any other property website. There are lots of empty flats --I suspect many of them BTLs--. Looking in a 10 mile radius of where I live I could see 10 flats out of about 50 properties.

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Guest Charlie The Tramp

Three years ago I met a couple of my generation while on holiday in Norfolk. We got chatting about their three sons. The eldest and second eldest had fair jobs and were buying their own homes whereas the youngest had a top job earning mega money and lived with his GF, both living the high life in a rented flat.

As property prices were on the way up he approached his parents asking for a loan of 50k as a deposit so he and the GF could buy their own home and said he could pay them back in full with his bonus year end. The father was reluctant knowing his son`s track record but was pressurised by his wife in agreeing, the 50k being a part of their pension pot. A few weeks later the son visited his parents and the father a bit concerned ask how the house hunting was going on. He was told they were still looking and had not found anything they liked. A few weeks later the son was made redundant and the father asked for the 50k to be returned but was told by the son that he was starting a new job with better conditions the following week. Not hearing from him for a few weeks the father ask to see him and he duly arrived with the GF driving a PORSCHE. Where the hell did that come from enquired his father, and the son replied well we decided that house prices were too high, as the one we liked was 300k, so you go for the second best. Well give me back the money left demanded the father only to be told that the new job was a lie and he and the GF were living off the money which was in her account as the bank was chasing him over a very large overdraft.

He was told that he was being cut out of his parents will until the money was repaid in full.

There`s more the GF run off with his best friend a few weeks later taking the money with her.

As I say once a b*****d always a b*****d.

:angry:

First-time buyers 'borrowed £1.36bn from family and friends'

FIRST-TIME buyers have collectively borrowed £1.36 billion from family and friends in the last two years to get a foot on the property ladder, a survey has revealed.

But nearly a third of the 881,000 people who purchased their first property during that period admitted they had no intention of ever repaying the money, according to the poll by Sainsbury's Bank.

Friends and family forked out an average of £1,552 on helping first-time buyers set up home, while more than 26,000 were loaned between £20,000 and £40,000 by generous relatives and pals, the survey found.

Intention

However, most first-time buyers are in no rush to repay their sizeable loans, with 31% admitting they had no intention of ever paying their friends or family back, the study showed.

Another 28% believed it would take three years to repay the largely interest-free debt, with only 21% claiming they would cough up the money within the year.

While in the past first-time buyers could claim their reluctance to repay debts was down to youthful inexperience - that excuse no longer seems to stand up, with the average age of the first-time homeowner soaring to 36.

Robert O'May, home insurance manager at Sainsbury's Bank, said booming house prices are forcing increasing numbers of first-time buyers to turn to their family and friends for help.

"First time buyers now represent around 30% of overall mortgage lending which is down from 51% in 1991. If house prices continue to rise, the pressure on parents to help their children on to the property ladder will grow."

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It's madness!

I would never (or expect anyone else to) act as a guarantor or mew to provide a deposit. As for risk, the thing is the bank won't miss out if things go wrong, but I'm sure it could break up a few families.

Also I agree if you can't save for a deposit then you shouldn't buy.

Having saved your own deposit is an indication that you are "ready" to take the responsibility and have the mechanisms in place to manage money.. where as being given a deposit just means someone has taken pity on you and chances are you may not manage.

There is one mechanism which I do agree with... which I don't think has been mentioned;

If say a child/grandchild has saved their own deposit, I think it's reasonable that if the parents/grandparents want to make a cash contribution (ie not from mewing) to help out when they buy, then that gives the right signals and incentive

- the child/grandchild has made the effort, and is "rewarded" by the gift.

- the parents/grandparents can make a contribution without risk to their own homes, and know that it's put towards a good use (and not a 40" plasma tv!)

- if the parents/grandparents live for at least 7 years it's IHT free (as I understand it).

This is what my parents did for my other siblings and will for me. It's not a huge amount, but it will cover all the costs of buying, so that everything I've saved will be used for a deposit.

Edited by beerhunter

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Helen Adam's fronts like firstrungnow and so on are nothing but clever fronts for her business of selling financial products. It is a despicable way of advertising and selling the products she makes money of. She is preying on the financially inept under the guise of "helping" them. It's disgusting.

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It's madness!

I would never (or expect anyone else to) act as a guarantor or mew to provide a deposit. As for risk, the thing is the bank won't miss out if things go wrong, but I'm sure it could break up a few families.

Also I agree if you can't save for a deposit then you shouldn't buy.

Having saved your own deposit is an indication that you are "ready" to take the responsibility and have the mechanisms in place to manage money.. where as being given a deposit just means someone has taken pity on you and chances are you may not manage.

There is one mechanism which I do agree with... which I don't think has been mentioned;

If say a child/grandchild has saved their own deposit, I think it's reasonable that if the parents/grandparents want to make a cash contribution (ie not from mewing) to help out when they buy, then that gives the right signals and incentive

- the child/grandchild has made the effort, and is "rewarded" by the gift.

- the parents/grandparents can make a contribution without risk to their own homes, and know that it's put towards a good use (and not a 40" plasma tv!)

- if the parents/grandparents live for at least 7 years it's IHT free (as I understand it).

This is what my parents did for my other siblings and will for me. It's not a huge amount, but it will cover all the costs of buying, so that everything I've saved will be used for a deposit.

Grandparents are great, mine still won't let me pay in a restaurant, even when you're over 30 you're there little boy/girl.

Yeah, I agree with that. If you want to add to a deposit out of money you can afford, then that's up to the giver. And it's a fact of life that some people's parents etc are in a position to help where as others aren't, I for one don't think people should be critised for that.

However, I would never take money from either my parents or grandparents, simply because they can't afford it. Sadly this doesn't stop them offering it and some members of my family who don't know their financial situation (or don't care) are excepting money from them, even when I tell them not to.

The IHT thing is more of a dodge, than an allowance I believe. Not that I think you shouldn't do it, I think IHT is rip off.

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Helen Adam's fronts like firstrungnow and so on are nothing but clever fronts for her business of selling financial products. It is a despicable way of advertising and selling the products she makes money of. She is preying on the financially inept under the guise of "helping" them. It's disgusting.

I think their habit of continually putting now at the end of someone elses brand and identity needed closer investigation :o

Parent Aid :: Child Abuse Prevention Center

Parent Aid has a dedicated and caring team of professional case managers who partner with families to provide support, parenting education ...

Perhaps their new venture is a form of parent abuse

http://www.parentaid.org/ :P

Edited by Converted Lurker

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Helen Adam's fronts like firstrungnow and so on are nothing but clever fronts for her business of selling financial products.

Yes, Helen Adams strikes again ! I don't really know why she bothers.

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Grandparents are great, mine still won't let me pay in a restaurant, even when you're over 30 you're there little boy/girl.

Yeah, I agree with that. If you want to add to a deposit out of money you can afford, then that's up to the giver. And it's a fact of life that some people's parents etc are in a position to help where as others aren't, I for one don't think people should be critised for that.

Totally agree with that.

However, I would never take money from either my parents or grandparents, simply because they can't afford it. Sadly this doesn't stop them offering it and some members of my family who don't know their financial situation (or don't care) are excepting money from them, even when I tell them not to.

Again I agree, I wouldn't take money from parents or grandparents if they couldn't afford it, and know it is not as simple as that.

Years ago as a child, I spent a week at my grandparents, and did some odd jobs for them. They paid me £20.. a huge amount to me then, but I didn't really want it because I'd had a brilliant week anyway (and a cooked breakfast every day... which was unheard of at home, but normal for my grandparents I believe). I went back a few weeks later to finish off the jobs which I'd not had time to do. Again I was paid, to which I refused saying I'd already been paid... after 10 minutes of "arguing" with my grandfather, I finally accepted out of respect.

The IHT thing is more of a dodge, than an allowance I believe. Not that I think you shouldn't do it, I think IHT is rip off.

I agree IHT is a rip off.. and a tax on what has already often been taxed.

I wouldn't say it's a dodge, more of working within the rules to reduce IHT ;)

Edited by beerhunter

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No, I'm very financially astute thank you, I just don't earn very much. There is a difference between this and being 'inept'.

Financially astute people would earn more?

I don't mean to offend at all btw although I am aware it may come across this way.

If you want to buy a house you have to work out either how to be more financially adept ie: earn more money or save up for your own deposit.

I don't think anyone would agree getting your parents to increase their own mortgage for your own property purchase is being financially astute.

If your parents were stinking rich and had cash lay round they could afford to give you (or loan even) then this would be more more financially astute thing to do.

Yes house prices are too high. Anyone irrational enough to buy a house when this is the case AND they can't actually afford to is being financial inept.

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Totally agree with that.

Again I agree, I wouldn't take money from parents or grandparents if they couldn't afford it, and know it is not as simple as that.

Years ago as a child, I spent a week at my grandparents, and did some odd jobs for them. They paid me £20.. a huge amount to me then, but I didn't really want it because I'd had a brilliant week anyway (and a cooked breakfast every day... which was unheard of at home, but normal for my grandparents I believe). I went back a few weeks later to finish off the jobs which I'd not had time to do. Again I was paid, to which I refused saying I'd already been paid... after 10 minutes of "arguing" with my grandfather, I finally accepted out of respect.

I agree IHT is a rip off.. and a tax on what has already often been taxed.

I wouldn't say it's a dodge, more of working within the rules to reduce IHT ;)

Your Grandparents sound like mine.

When I talk about IHT being a dodge, I believe the seven year thing is how far they look back into someones finances when the die, i.e. seven years. Strickly, if you receive more than a certain amount from a relative, etc (£7,000 I think) you are supposed to pay IHT. If the relative dies more than seven years later, then it's either not tracable or difficult to trace. I have to admit, I'm not 100% sure on this, so you might want to check.

Edited by laughing_goat

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PAY BACK TIME...

My parents provided me with a comfortable upbringing and an expensive education, at one of the top Universities in America- no tuition subsidies from the government existed then or now.

My deal with my father was that he would LEND me the money to go to university, and as my choice of college was a good deal more expensive than my siblings choose, I was left with a large loan when I finished university. I started work at one of the large global banks in New York, on a good salary. But I could never keep up with the spending of my colleagues, because I was sending money home.

My father had his own company, in a highly cyclical business. It thrived for decades, but then just about as I was finishing college, the business failed. So the money I was sending home, was paying for food for my parents table, and for soem of the necessities of life. Although it mean that I was living less-well than others at my bank, I was happy to be repaying to my parents a small part of what they had given me for so many years. One of the proudest days of my life was when i finished repaying the loan. My father has shown me respect ever since.

I am not sure that pandering to the wasteful urges of their children, is doing their kids and grand kids any good.

Well said Dr Bubb,

When I went to university, my parents gave me no money, not because they were tight, but because they wanted me to take responsibility for myself (i.e. get a PT job). If I'd have got in to serious difficulties, I'm sure they would have helped, but at the cost of having to explain the whole sorry mess to my Dad (and I sure didn't want to do that). I got into debt, a lot of it unnessesary, but I was the one who had to pay it back, so I very quickly learned to budget.

My brother, on the other hand, lived with my Mum when he went to college (I lived away) and was 'quietly' helped out by her. He's 28 now, has no savings and still going to my Mum (who earns half his salary) for 'help'.

The last time he went to my Dad was quite funny. His washing machine died, so he went to my Dad for a hand out. My Dad took him to an auction place to get a cheap one, they bid about £50ish and got one, when they went to pay for it my brother assumed that Dad was paying, he very quickly found out he wasn't. When he said he couldn't afford it as his Sky subscription was due, my dad and the auction bloke couldn't stop laughing. He had to buy it (he'd bid so he had no choice) and go a whole month without Football (didums). I've told my Mum this story in the hope she does the same.

LG

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I am not sure that pandering to the wasteful urges of their children, is doing their kids and grand kids any good.

Unfortunately, people of a certain type and/or of a certain generation associate love with material things - if someone gives them something materialistic then they interpret it as affection. Too many parents and grandparents are scared stiff of losing the affection of those they love and hence try to keep them close by the use of money.

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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