Don’t you find some conversations just unbearably awkward? You’ve got your, ‘Remember when I lent you £20 TWO MONTHS ago, any chance I could get that back?’ or your ‘I’m pretty sure you’re boyfriend was checking someone else out’ kind of ones – but for me, my most recent awkward conversation was with my mum, and surprise, surprise – it was to do with money.
We’re pretty open with each other in general. We’re both confident, and there aren’t really taboo subjects. I never really had to have ‘the sex talk’ because it had always been discussed openly since I was young. We’re an open kind of family.
Yet the conversation I struggled to bring up – for years – was one about asking to borrow/have money to buy a house.
I hinted at it. I’d mention I wanted to start looking saving for a deposit/looking for a flat – hoping for a response, but it never properly happened.
It was never that I thought she wouldn’t want to help me out, I just didn’t know how much she could.
God, even asking for the kind of money I needed was embarrassing. It’s not like asking for £10 so you can go to the pub when you’re skint, it was thousands of pounds. The kind of amount that would likely wipe out their lifelong savings.
You know, even if you know they want to help you – there’s that really big part of you that doesn’t want to impose yourself.
My sister and I would chat about it. ‘How much do you think we could have/borrow from mum? we’d guess. The fact of the matter is, a conversation had to happen.
So here’s where the #ontheladder guide from the Post Office, who have partnered with The Money Charity comes in handy. It’s pretty amazing and gives tips from BOTH SIDES of the situation. So how to come at it as a child asking for money, and how to deal with it as a parent considering giving/loaning money.
So we sat down, and my boyfriend sat down with his parents and outright asked. Can you help? Do you need us to pay you back? Is it a gift?
It did get a bit complicated because my parents and his parents had different views on the matter and we decided to keep it simple and only take the money that both parents could equally gift.
What I realised quickly that my mum really didn’t see it as the big conversation I had built it up to be. She’d clearly been thinking about it for a while, and had already had conversations about what they could do with my dad. She assumed we knew she would help, and I assumed that they would – but that conversation about ‘specifics’ didn’t happen, until it did.
It’s a bloody imposition mind. As much as you know they want to do it, it’s a pretty bloody big favour!
So yeah, I was really lucky that I didn’t have to pay the money back – no legalities or expectations. So what if you have the parents who are only able/or prepared to lend you the money? Do you go and get a contract? Write down the details? Is it literally just an issue of sticking the money in your bank account and hope you pay it back?
The fact of the matter is most parents don’t get together a formal agreement with their children. Because of this, they fail to provide a deed of gift or letter of intent which could put them at risk legally.
For me, and I know this isn’t the ‘money-guru’ opinion (as if anyone calls me that anyway!), but as much as it is important to protect your money – you need to protect your relationship when it comes to borrowing and lending money.
There isn’t a more important relationship for most, then that of parents and children. I believe formalities help the situation, so you know what is expected/understood.
So some stats for you:
Despite the large amounts of money being shared, families have neglected to formalise loan agreements, most commonly, attempting a verbal agreement (29%) and some not discussing the terms of the loan at all (19%).
So do you get a lawyer? Only 15% consult a third-party, such as a solicitor. Furthermore, the majority of parents (83%) are neglecting to put a letter of intent or deed of gift in place to formalise their financial support. Without this, both parents and buyers are left legally vulnerable and could even be pursued for additional costs such as stamp duty.
Only one in five families will agree to a regular repayment plan (21%), with parents assuming their children will pay them back at some point.
So here are some top tips to get that conversation going:
- Owe parents money? Make sure you’ve paid them back everything. You can’t prove to them that you’re responsible enough to loan money and pay them back if you still owe them that cash from months ago.
- Be really specific about what you need (as in, do some maths, talk to mortgage brokers etc). No-one is going to want to give you a substantial amount of money if you don’t know what you’re talking about.
- Have an open mind and see things from their side too. Go in knowing what you want, but make it clear you’re not demanding it.
- Give your parents time to think it through. Come on, it’s the least you can do right? They’re going to need to look through their finances and see what they are comfortable doing.
- Be thankful. My God be thankful.
So if you’re thinking of offering or asking for financial support to get #OnTheLadder, download the Bank of Mum & Dad Conversation Guide.
This piece was written in collaboration with the Post Office. Hope you enjoyed it!