Giving Money for Deposit on Home to Children

I would love to give my children money for a deposit on a property. But having 5 children between us, we just cannot afford it as we would want to treat them equally. Still have two 23 year old living with us. Looking forward to having our house to ourselves

When we helped our son out with his deposit, the building society asked us for a letter stating that our contribution was an outright gift, not a loan.

If a grandparent makes a loan, they see it as another charge on the property, and adjust the mortgage offer accordingly.

Easily done mumof

Sorry Anya. I hadn't properly taken on board the second post from OP.

Parents shouldn't be held hostage by their children's demands for equal shares of money they use to help other children. It's your money, spend it as you see fit. My mother helped my sister with a down payment on her house, otherwise my sister would not have been able to buy it. Do I resent it? Of course not! I'm glad for her. I live in council housing and would not be able to afford to buy a house at this point. But my sister is the carer for my mother, and my mother lives with her, so I'm truly grateful to my sister for being there for my mum, and am glad my mum can be there for her in this regard.

My mum can spend her money on what she chooses. I don't keep a tally card to keep track of how much she spends on each child. I don't care. It's not my business.

It is a sad situation when siblings cannot be happy for one another!

I bought things for my girls when they needed them (new shoes /coats etc) and they did not always need them at the same time. So they got used to only having things when needed not because the other had one!! Hopefully they always felt equally loved and so , other than minor lighthearted rivalry, don't seem to worry about who has what when. They know we would do what we could for either if the need arose!

mumofmadboys

"...my DD is quite a jealous person. She used to keep bringing up the fact that we paid school fees for our DS throughout his schooling & hers through secondary ( we couldn't afford to pay hers at primary level). However, as we point out, she has been more academically successful.

If she found out we were considering giving him a big chunk for his deposit, it could estrange her. Not pleasant, but a fact"

What does this reply by OP suggest to you? Doesn't sound to me like she intends to tell her 'jealous' daughter because it would 'estrange' her.

Whatever you do, make it fair to the sibling.These things can rankle, even if they don't need the money themselves.

A difficult decision and one which needs careful consideration if it's going to upset the other sibling. I agree that a change in your wills might be the only way out of it. Are they both amenable to sitting round a table and discussing the situation together - maybe that way they'd each see the other's point of view? Many years ago my in laws gave us £200 for the deposit for our first house, by the time my SIL got married 3 years later house prices had gone up so much the deposit they got was £3200 which at the time we thought seemed grossly unfair. We were only in our early 20s with little money and 2 kids. I don't think we understood back then the reason for the difference. Maybe if someone had explained it better there wouldn't have been some resentment.

'And keeping it a secret from his sister". I don't think that was ever mentioned.

We have always given to our children as needs arose and never worked out the actual amounts or whether one has received more than another. I now realise that we have been very fortunate that our children don't weigh up the fairness of one gift against another, quite the opposite in fact, they also help each other out if and when they can. I can understand the problem if the OP's daughter will be jealous, so an adjustment to their inheritance positions seems to be the way forward.

Perhaps £60,000 is peanuts to the OP.
If I had it, I would 'lend' it if it was to be spent on property and not frittered away (on permaloan) and then adjust my will accordingly.

Pigs might fly too.

Strange to you perhaps GrandmaKT but not to me. You can have your opinion and I can have mine.

There's a big difference between helping our grown up children out and shelling out £60,000. And keeping it a secret from his sister

What a strange thing to say Anya! I don't see the point in having money tied up in investments when it can be helping out family members! We have given and lent money to both our sons over the years and (whilst I agree that too much money isn't at all good for anyone's children) I'm just so glad that we have been able to help when we could.

No, it's not the way to go. Young people need to make their own way in the world. Put your wealth back into your bank or investments.

He said he would stay in the UK for the next 4-5 years then probably go abroad. Until then, buying saves on renting- and the insecurity of no long tenure- and he can rent out the flat after he leaves.

We helped DD1 with a deposit ... a loan we said but we don't expect it back!

DD2 did not need financial help as her partner had a flat already and when they bought jointly they had a deposit from the sale of his flat.

But I think in OP situation janeainsworth's suggestion would be a good solution.

We did what janeainsworth is suggesting. We gave one DC an interest-free loan for work-related purposes, and told the others about it at the time, and that we would be happy to do the same for them should they need it. We have put a note with our wills that the loan (which we do not need to have repaid for the foreseeable future) should be counted as part of that DC's share before anything left after care costs is divided. Everyone seems happy with that.

Make it an interest-free loan but state that the size of the loan increases with the value of the house. Then when you die, the value of the loan will be added to the value of the estate and and he receives his share of the estate, it will be inclusive of the then value of the loan.

Assuming your estate is to be divided equally between your children. It puts them in an equal inheritance position

Example:
You lend him 25% of property say £60,000 on a £240,000 property

When you die, your estate is worth £500,000 and his property is worth £400,000 so the loan has now increased in value to £100,000.

Your estate is worth £500,000 +£100,000 + £600,000.

Each child inherits £300,000. Your son's share is made up of the £100,000 invested in his home plus £200,000 from other assets and your daughter gets an equal amount.

We have done something similar with one of our children.

Money given to offspring for deposits usually has to be an outright gift, declared in writing. Mortgage lenders do not like loans from parents because it can be a demand on the property should the mortgage default.

Some mortgage lenders will allow parents to be co purchasers on the property.

x

Oh yes, of course. You were concerned about both your children moving abroad weren't you, trueblue22? Are you sure you're not hoping to persuade your son to stay by offering to give him the deposit to buy a property over here?

I'd be a bit wary about lending him the money for a deposit on a property if he is going to South America as you said recently.

If he wants to go for a short time he may not want to live in London when he comes back, or he may not come back at all.
You said your DD and family are going off to live in Canada, will they need help setting up there?

You may (or may not, of course) need the money to spend on lovely holidays to visit both of them. It's not much fun travelling long-haul in economy!

Yes, I think it's perfectly reasonable to help your son as he needs it, then make a percentage adjustment in your will.

In a recent thread you said he was moving to South America - I assume that's now off the cards!

We had this same issue trueblue when DS was able to buy his first London flat from his earnings in the City. DD was (and still is) doing cancer research and her partner was then a trainee doctor. We gave them the deposit for a flat and told DS what we had done and said we would make it clear in our wills that he was to get the same amount as she had already had before the estate was then divided 50/50.

Bless my kind generous DS who said not to do that as he was just pleased we had been able to help his sister, who will never ever have the earnings that he does. I am very proud of them both.

Good idea, jane - a loan rather than a gift.