“Hi Jenni
When I was 25, my parents gave me and my boyfriend £40,000 towards a deposit on a house. We’d already saved £20,000 between us, but the money they gave us allowed us to get a better interest rate.
Four years on, my parents want us to start giving the money back. My dad got made redundant a few months ago and is struggling to find work, my mum only works part time because of health issues, and they’re struggling for money. It turns out that the £40,000 they gave us was the majority of their savings. They have money set aside for retirement, but it’s not enough to start using it early. They’re both in their late 50s.
My boyfriend and I have done some sums and we’ve worked out that we can comfortably afford to pay them £100 a month without our life changing significantly. Or we could completely overhaul our finances and pay them more than this, but we want to start trying for a baby and we don’t want to struggle for money when we eventually have one.
What should we do?! When they first offered to give us the money, we were obviously really grateful, but now my boyfriend’s annoyed with them for helping us out. He keeps saying how irresponsible they were to give so much of their savings away. We wouldn’t have accepted the money if we’d known they didn’t have much left, but now we feel like we’ve been caught up in this mess.
Around the time that my dad got made redundant, my boyfriend got promoted at work and an £8,000 pay rise. My parents keep talking about the pay rise and using this as a reason why we should be able to pay the money back. I don’t know what to do. I don’t want my parents to struggle, but I also feel like they should have been more careful.”
Tess, 29.
*Update: I’ve spoken to Tess since she sent this message and she has confirmed that the £40,000 was initially given to her as a gift, rather than a loan. Her parents explicitly said that they wouldn’t need the money back.
Tess also informed me that had her parents not gifted her the £40,000, she would have been able to buy the house anyway with the £20,000 she’d saved with her boyfriend.
Oh, Tess. You poor thing. This is certainly a tough situation to be in, and I imagine it’s been incredibly stressful for everyone involved.
I can empathise with everyone in this situation. On the one hand, I can completely understand why your parents would reach out to you after everything they did to help you and your boyfriend to buy your own place. On the other hand, I really feel for you and your boyfriend. You’ve finally bought your own place, made it your home, you’re planning for the future, and now you’ve been dealt this devastating blow.
If I absolutely had to pick a side here, I’d side with you and your boyfriend over your parents. They initially gave you the £40,000 as a gift, rather than a loan, and therefore, it’s unrealistic for them to expect that money back - even though they’ve fallen on hard times. I’m almost tempted to agree with your boyfriend when he says that they were irresponsible to gift you such a huge portion of their savings. They shouldn’t have given away £40,000 without a sufficient safety net of their own tucked away in the bank.
Saying that, what’s done is done. There’s no turning back the clock and no amount of pointing the finger is going to fix this situation. It’s clear that your parents love you and are willing to do everything they can to help you. Although their gift was foolish, given the lack of money they have left, their decision came from a good place. They wanted to help you and they probably feel awful about asking for your help at this time.
With that in mind, I think it’s wise for you to repay what you can. These repayments should absolutely be on your own terms, rather than based on any demands your parents make.
Since the money was given as a gift, rather than a loan, it’s unlikely that you’re under a legal obligation to repay it, especially if your parents signed an agreement when you initially applied for your mortgage.
But nevertheless, I feel that repaying what you can is the right thing to do. If you want to maintain a good relationship with your parents, it’s essential.
Sit down with your boyfriend and work together to look for ways you can stretch that £100 to a figure that’s more likely to help your parents at this tough time. You managed to make things work before your boyfriend’s promotion, so unless you’ve massively inflated your lifestyle since then, it shouldn’t be too difficult to go back to how things were and donate the extra to your parents.
If you’re okay with the idea, it might be worth looking at remortgaging your home. You’ll be able to get some of the money back that you originally put in the property, but you may have to extend your mortgage term and/or pay bigger monthly repayments.
I’d strongly recommend seeking financial advice here, whether it’s through a financial advisor or a mortgage broker. If you’re nearing the end of your fixed rate period, remortgaging your home is likely to be more straightforward than if you were to exit your current product a year or two early. There’s likely to be fees involved and so it’s important to do some calculations before making the move. That way, you can determine whether remortgaging is actually a financially sensible move.
I can’t recommend a particular financial advisor, but when buying my apartment, I had a great experience with the online mortgage broker Habito. They also do remortgages and will take a good look at your finances before highlighting the mortgage deals that are most suitable for your situation. If you decide to use Habito, creating an account using my referral link will earn you and I £100 each on successful completion of your remortgage.
Good luck! I’m hoping that everything works out for you and your family.
To learn more about buying your first home, take a look at Can’t Swing a Cat’s first time buyer blog section.
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