Giving Money for Deposit on Home to Children

I haven't read all the comments but wanted to say how things have been in our family. When my mum was alive we had a time that we were desperate to move but couldn't afford to. She gave us some money to help, discussed it with me and my brother and trusted us to sort it out with our inheritance from her when the time came. Which we did quite amicably.
We have helped both our daughter's. One at a time, being open and discussing with them both. They've now both had same money with provision that it had to be spent on housing.
We had to sign a letter to say the money was a gift and that we held no stake in the house.

Not a lot of help - but I have told my children to forget "Equal" and would always go for "fair". If one earns eyewatering salary, why help them - they can get "stuff" from you over the years, perhaps first chice. theo ther needs help now . Whatever you do will cause ructions, and accusations of favouritism.

Discuss your decision with your offspring, but tell them that it is YOUR money, so it is immaterial how you spend it!

, go for it!

It is difficult to strike a balance between openness and confidentiality, especially where the siblings have different needs and are not the best of friends.

Our two understand and accept that neither of them knows all about our financial dealings with the other, just that it's 'fair' to the best of our ability. We have helped both in different ways at different times.

We have no way of knowing whose needs will be greatest as time goes by - perhaps our own.

Only when you look back from the Pearly Gates will you know what would have been 'fair'.

I think it is extremely important to treat each child equally, after all, why should one child be penalised for being better off financially than the other. Also, you don't know what will happen in the future with your DD, the financial sector can be very volatile. Equally, your DSs financial position could vastly improve in the future. I agree with janeainsworth that you should make it an interest free loan, rather than a gift, and make a provision that the amount of the loan should be given to your DD before remaining assets shared. That way, you are helping your DS when needed but your daughter will be treated fairly. If you feel your DD wouldn't be bothered she could always decline the amount of the loan and just split 50/50 what's left.

oh boy this resonates with me. Back in the early 1970s my mother 'lent' my sister £30,000 to help buy a London flat. My sister was unmarried and my mother was anxious that she should have some financial security. In her will she stipulated I should have the first £30,000of her estate. But she only died a couple of years ago, so that £30,000 (to allow for inflation etc) should in reality have been a sum that would have been more than her entire estate. Worse than that my sister tried to say the £30,000 is worth much less now than then and could not get her head around the maths. I tried to say that if we had had access to £30,000 in 1970 we would have had a very different property or lifestyle than the pretty hand to mouth existence that we did have. But as I did not want a major family row, I agreed to split the estate 50/50 and forget the 'loan' but it still rankles I can tell you. Be very very careful.

Not much use to the OP but we found that the secret to success was to start as early as possible. We put down the deposit on a 2 bed Glasgow tenement flat for DD1 when she was 17 and off to Uni. Her mortgage, us as Guarantors. She rented out the biggest room as a bed sit and that was sufficient to cover the mortgage and she + flatmate shared the bills. Later she went to London to work for a year but only rented a 'big cupboard with a bed'. Meanwhile DD2, was living in the Glasgow flat with a flatmate while she attended College.

DD2 then went to Uni in Newcastle and her big sister returned to work in Glasgow, this time with a live-in boyfriend. We again stumped up the deposit for a 2 bed flat for DD2 where she lived happily for 3 years. Unfortunately house prices fell in Newcastle so that flat was sold at a loss but shortly after DD2 returned to Glasgow to work DD1 decided to sell her flat and got nearly 10x the original price. She gave her sister enough for a deposit in Glasgow from the profits and bought herself a house near us.

Both daughters have now moved to old cottages (just like our house) but the initial deposits got them on the housing ladder before they were 20 and have allowed them to pay a big deposit = small mortgage on their subsequent houses. Apart from the 1 year in London, neither of them has ever paid rent and they are both (in their 40's) on track to be mortgage free soon.

Sorry to go on at such length but the moral of this story is that a small amount given to the DC early on is better than stumping up a huge deposit for a family home later. I think that owning their own, albeit small home from an early age, made my DDs more responsible, given that they had to budget for a mortgage/insurance, had part-time work throughout their studies and did a lot of DIY to maintain & upgrade their properties.

When our eldest daughter wanted to buy a flat in London we gave her the deposit, but were named as co-owners. As suggested by J52 on page 1.
She didn't have a steady job at the time, but we thought the flat she chose was a real bargain and worth the investment.
Later, when she was more settled and changed to a better job she sold it for quite a big profit and paid us back.
Our other children, who were all married by then with their own homes knew about it but didn't mind.

It sometimes seems however hard we try parents can never get it right!!!!

When my eldest son moved in with his then girlfriend we gave them the deposit for their first house remembering how my in laws had helped us get on the property ladder. We too had a clause put in a contract that if they split up the money was to go to our son. They subsequently married so we never had any issues. Almost 25 years later my son has a well paid job and we have never really had to help them out other than buying things for our granddaughters. My younger son however over the years has had quite a lot of handouts from us to help him out financially plus we paid half of the costs for his pretty expensive wedding 7 years ago. I dread to think how much more he has had than his brother and I dare say the eldest one would probably be quietly miffed if he knew. Their lives have taken such diverse roads as the younger one has never been conventional and even now he is still struggling with two small children in another country. Our wills have still divided everything equally between the two of them though which only seems fair.

We did the same as PPP, downsizing and leaving London so that we could help all our children to buy. We've given them legal mortgages, to be repaid on sale of the property. If we die before repayment the loans will count as part of our estates and be taken into account when the proceeds are shared out.
Even so, one son is jealous because others have larger loans than him - initially two bought a property together rather than on their own, and this was worth more overall though less per person. Later one moved to her own property when her brother married and had children. For the first four years my envious son had a larger loan than either of them. You just can't win....
We have written into the mortgages that the properties cannot be rented out - we're trying to give them somewhere to live, not to earn an income. There are also restrictions on moving anybody into the property as we are worried about losing capital because of ex-partners with an eye on the main chance. Of course if the situation involved sharing costs, marriage or children it would be a different story.
It is hard to know if having their own property is a disincentive to ambition at work, all depends on the personality I suppose. The one who is jealous does not have permanent or full-time work and shows no signs of changing this situation.
Nobody helped me when we bought our first home, though my family could have done. The situation in London and Greater London has changed, most people will never be able to buy a reasonable property within commutable distance. I disagree with previous writers, I think that it is a good idea to enable your children to buy a property which cuts down their commute if this is possible. I do appreciate that if people cannot afford to help their own children this would seem unfair. But I don't want my children to have such a long working day that their home life is limited.

When my kids were small money was tight and while for small amounts we were always scrupulously even, for larger amounts we gave as they needed it. For instance, if one of them needed a pair of £40 Startrites only that child would get the shoes as I couldn't afford £80 in one go. This was explained to them and they (sort of) got the point. Now I would give one a contribution towards a deposit and then give the other some help later when they needed it or even the amounts out in the will.

I do believe in being fair but you can only do what you can afford.

We never treated our children equally when they were young, just provided what was needed by each one when they needed it. They had very different needs including paying for schools in some cases. I think that has made them understand that life is not strictly 'fair' and that each has different needs at different times.

They still have different needs and we have helped each of them with home purchase with different amounts for each. It has all been out in the open so everyone knows and I don't think there is any resentment. There is a note with our wills with the details and we trust them to do the right thing. I think they will.

true has your son considered shared ownership so he could buy a better flat? London is so expensive that it is almost impossible for a single person to buy anything and shared ownership might allow him to buy something big enough to share in the future. If you can help him buy 50% then the rent element would probably be affordable. Have a look at sharetobuy.com it is a good site and has a calculator which shows what the monthly repayments would be depending upon the deposit.

PPP I read that article in the Sunday Times too and it stayed with me for months. It would be a salutary read for many! We too have vowed to treat our children equally in life and in our wills, because even though Daisy Goodwin "understood" the motives, she still suffered awful feelings of rejection after her mother's passing.

As long as things come out fair in the end, that's all that matters. And as has been said, may be some kind of signed agreement could be drawn up? My DH gave his mother sound financial advice on several occasions, but she chose to ignore him every time and gave everything she had to his sister. This kind of unfair treatment has deeply upset him for years, even though he pretends not to care. I think it's dreadful.

My sister has been happily married since I was 10 but my marriage ended after 6 years, with 2 children and on benefits in rented accommodation. My father wanted to give me money from a bond that was maturing in order to provide a deposit for a house. I didn't think it was right as my situation wasn't my sister's fault, and I didn't think she aught to be penalised for it.

Now my children have grown, my eldest child married and I paid for the very expensive wedding. My youngest child, although not married, wanted to buy a house with her boyfriend and I felt that I could help. So, as they don't intend getting married, I talked it over with both daughters and my eldest understands that because I paid for her wedding and, I won't be paying for a wedding for my youngest, I should be able to help them financially with their house purchase, so that's what I did. They also know that if they did decide to marry, they will pay for it themselves, and they are happy with this arrangement.

Presumably you paid for your daughter's wedding so you could balance that out, in these days of equality, by helping him with his house purchase.

Our son is an only child, so we don't have any of these problems. However, our daughter in law's parents give all kinds of financial help to her younger sibling whilst ignoring daughter in law, stating that as they get help from us, they don't need anything from them! Our son is a solicitor and drafted his in law's wills, so he is aware that there is no provision for this situation to ever be 'evened up'. I think this is a dreadful way for daughter in law's parents to behave, but she doesn't seem bothered about it, so I bite my tongue!

A while back I read an article by Daisy Goodwin saying how hurt she felt when her mother left more money to her siblings in her will. She understood that they 'needed' the money more than she did, but she felt less loved by her mother's action. We therefore decided that, whatever their different circumstances, each child should be treated equally.

I think it is a fine thing to explain what you are doing to your daughter and that things will be balanced out in your will. If she doesn't like it. Tell her it is fair and that's it.

As for buying in London, help him get on the ladder there if you can. Commuting is no fun and a flat further in will be a better investment.

It is interesting to read views about leaving money. We have spent all our lives saving and making provision for our retirement and now we are downsizing and are going to split the equity between the children. Want to see them enjoy it while we are still alive!

Our youngest was finding it hard to get onto the property ladder.

To make everything acceptable to other family members our Solicitor drew up a contract to say that our deposit would be refunded to us in full if ever the property was sold. Our connection was added to the property title deeds and solicitor charge was around £50 ~ well worth the money.

Also meant that if DD had a partner move in at any point, only to separate later, our deposit would not be included in the split of any assets. Excellent result, as that is just what happened ~ so, thankfully, our money was still safe.

I have never added up what I've spent on my children. They get what they need. I helped my daughter with a deposit for her house but have helped with home improvements for my son. Neither of my children have ever questioned it. When we die they will get half each, if there's any left. Just to throw something into the conversation, if your daughter has so much money why not ask her to help her brother? If she says no just say that you'll have to do it then :-)

Witsyl's solution is what I usually suggest to clients in this situation. Depending on how wealthy the parents are, the gift might be a Potentially Exempt transfer for inheritance tax purposes, so it should be recorded. It sounds as if DD and hubby will have to pay IHT eventually, so consider leaving any gift to her in trust for her children to skip a generation and avoid double taxation. Discuss this idea with her first!

I helped out my daughter when she was buying a home. Then I made my will so that the other children got that much money before the rest was shared out between them.

Just want to add that if even your best efforts don't keep DD from being resentful, that's on her, not you and DH.

I'm sorry you're faced with this dilemma, trueblue. It would be great if DD could be happy for DS, but if your gut is telling you she would resent it and that it might "estrange her," then I think you have to be careful. I know you don't want her to become estranged from either you and DH or her brother. Letting her know you'll adjust your will and/or give her up to an equal amount if she ever needs it may help alleviate the problem. As such, they sound like good ideas to me!

I wouldn't make the deposit a loan though I understand why some have suggested it. Nor am I saying that just for the reasons some posters have given. Having our AC (adult children) owe us money can lead to serious tension, even if it is interest-free. So it may not be a situation you want to get into.

IMO, giving to our AC while we're still living can be a joy. And why not gift some money to them when they need it, instead of making them wait for everything till we die (or till most of it has gone to nursing costs) and their time of need is probably past (hopefully, in fact), anyhow? As long as you can find away to stem DD's jealousy, I think you'll be ok.

Give help when it is really needed, how upsetting to think that there would be an estrangement for giving one more than the other, bit like being blackmailed. To buy in London is going to far for a first buy, perhaps your son could start off in a cheaper area. Having said that, I am estranged from my daughter, which is heartbreaking. Therefore you could say I am in no position to give advice. I have helped both my children in different ways according to their needs as they have different lifestyles, put them first as I don't feel comfortable treating myself. If your dd is doing really well and ds tries and works hard but doesn't get anywhere think it would please your daughter you could help him out.

spouses of kids can get their hands on the money in the event of divorce. If a spouse is not careful with money, put it into a trust for the grandkids and only allow those whom you trust to spend appropriately to be trustees to oversee the spending.
Some inlaws have chips on their shoulders and can implybthat your generosity is a bribe and that you are buying x,y, z'a affections by being bountiful so watch out for green eyed monsters. basically, it's best to do what you want. I explained everything to my lot and now wish inhadn't bothered.

We had to write a letter stating that the deposit we gave to our youngest daughter was a gift. However, as she is buying with her boyfriend, whose parents aren't in a position to help out, we didn't want to be in the position of loosing our money should they split up, ( which has happened to friends of ours ) so my DD and her BF have made a deed of trust? I think it is, which states that in the event of the flat being sold we should get the deposit money back, then the remainder would be split evenly. Obviously if they sell the flat to move up the ladder in a few years time we wouldn't expect to get it back. We lent a little money to one of our sons for a deposit, but he is well off enough not to need as much as our DD did. He says he doesn't mind in the slightest about the disparity, neither do the older 2, who are already well established on the property ladder. We have done other things for them as and when they needed it.