Bank Of Mum & Dad .. what's a fair rate?
Discussion
To save a bit of time on a small mortgage, i have applied to the BoM&D for a loan. It will take 2-3 weeks to get an Offset from **Bank and there is the initial fee of course.
I know PH is full of trustafarians, so what would you offer to pay as interest? Just to add, the BoM&D don't want any payment (they just want me to be happy and help them set up their new PC and gardening and ...) but i feel a bit less needy if i pay something.
I know PH is full of trustafarians, so what would you offer to pay as interest? Just to add, the BoM&D don't want any payment (they just want me to be happy and help them set up their new PC and gardening and ...) but i feel a bit less needy if i pay something.
Megaflow said:
When I have had loans in the past from BoM&D we took their savings rate and the cheapest loan I could find and went smack in the middle of the two numbers. Equal benefit for both parties.
Ok, we hammered out a deal yesterday - i've agreed on BoE + 1.25% with the BoM&D. TBH I feel a little cheated.fido said:
Megaflow said:
When I have had loans in the past from BoM&D we took their savings rate and the cheapest loan I could find and went smack in the middle of the two numbers. Equal benefit for both parties.
Ok, we hammered out a deal yesterday - i've agreed on BoE + 1.25% with the BoM&D. TBH I feel a little cheated.mrmr96 said:
fido said:
Megaflow said:
When I have had loans in the past from BoM&D we took their savings rate and the cheapest loan I could find and went smack in the middle of the two numbers. Equal benefit for both parties.
Ok, we hammered out a deal yesterday - i've agreed on BoE + 1.25% with the BoM&D. TBH I feel a little cheated.
fido said:
Megaflow said:
When I have had loans in the past from BoM&D we took their savings rate and the cheapest loan I could find and went smack in the middle of the two numbers. Equal benefit for both parties.
Ok, we hammered out a deal yesterday - i've agreed on BoE + 1.25% with the BoM&D. TBH I feel a little cheated.With these sort of loans though there is much more to consider than just the usual "Can you afford to repay it?" Other children have to be taken into account, who might be much less stable than you. How would it go down if a sister asked for the same loan, yet Mum and Dad did not consider that they were anywhere near as likely to repay or even make the interest payments?
A long time ago I was mid term on a mortgage and found that the windows I planned to replace in a few years were not going to last the winter. A quick deal with the BoM&D resulted in a fix rate loan over a 12 month term at an interest rate half way between that they got on their savings and that which I could have borrowed it at on a short term loan. Everyone was a winner and the debt was repaid with all interest and a thank you meal well inside the term.
^Yep, they've helped me out on a few occasions when i've screwed up my cashflow but i always redeem promptly.
Slightly off-topic but do you ever drive through Wimbledon (South). I've seen your car (CS) or one like it, blasting up and down the high-street .. in a socially-acceptable manner i should add.
Slightly off-topic but do you ever drive through Wimbledon (South). I've seen your car (CS) or one like it, blasting up and down the high-street .. in a socially-acceptable manner i should add.
fido said:
Slightly off-topic but do you ever drive through Wimbledon (South). I've seen your car (CS) or one like it, blasting up and down the high-street .. in a socially-acceptable manner i should add.
I do get down that way from time to time but doubt that that was me 
Only just got mine back after a few months sorting out a leaking sunroof (memo to self if a seal isn't leaking, don't replace it even if it looks a little ratty!)I was in a pickle last year and the BOMD bailed me out by withdrawing the money from a saving account at 5%.
Without hesitation I offered to borrow the money from them at 5% interest so they weren't out of pocket.
They've done an awful lot for me while I was at Uni and before, so to pay them a decent interest rate and not leave them out of pocket for the umpteenth time was the least I could do.
Without hesitation I offered to borrow the money from them at 5% interest so they weren't out of pocket.
They've done an awful lot for me while I was at Uni and before, so to pay them a decent interest rate and not leave them out of pocket for the umpteenth time was the least I could do.
amoeba said:
kiethton said:
Wow, your rather lucky...
Last time I looked to borrow money from my parents for a similar purpose they seemed to think that 10-15% APR was fair...so that plan was shelved
Nice to know my parents aren't the only tight ones!Last time I looked to borrow money from my parents for a similar purpose they seemed to think that 10-15% APR was fair...so that plan was shelved
I think you should pay them whatever rate, if they were not an option, you would have accepted from the high street. If you ever actually pay it all back, including the agreed interest, then if they also accept it would otherwise have just sat where it is now, then they have the option to split the difference with you at the end of the term. The point I'm making is you have to properly compensate them for the foregone opportunity because you have their money.
Without taking a market rate from you they cannot properly evaluate the potential loss from you holding their money.
If that is too mean for their taste then I would suggest they give you a small gift of the amount they are prepared to save you and tell you to borrow the principle at your aceptable market rate. That way they still have the bulk of their money and do not loose any opportunity.
I see a serious side to this. Many older people accept ZIRP or similar out of ignorance. I have lobbied many of my friends to encourage their parents to consider the options available and not just accept financial repression. Once they loan you money it gets more difficult to explore the options.
Colin.
Without taking a market rate from you they cannot properly evaluate the potential loss from you holding their money.
If that is too mean for their taste then I would suggest they give you a small gift of the amount they are prepared to save you and tell you to borrow the principle at your aceptable market rate. That way they still have the bulk of their money and do not loose any opportunity.
I see a serious side to this. Many older people accept ZIRP or similar out of ignorance. I have lobbied many of my friends to encourage their parents to consider the options available and not just accept financial repression. Once they loan you money it gets more difficult to explore the options.
Colin.
jagracer said:
amoeba said:
kiethton said:
Wow, your rather lucky...
Last time I looked to borrow money from my parents for a similar purpose they seemed to think that 10-15% APR was fair...so that plan was shelved
Nice to know my parents aren't the only tight ones!Last time I looked to borrow money from my parents for a similar purpose they seemed to think that 10-15% APR was fair...so that plan was shelved
no 'poor credit history' either, just no lending !
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