how do I protet myself if I lend money

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  • Biggles
    Biggles Posts: 8,209 Forumite
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    Trishy_M wrote: »
    He is self employed so can't get a re-mortgage with a real bank
    Complete rubbish. Self-employed people can get mortgages - do you think they all live in tents? They don't have salaries but they have accounts that show their income.

    In fact, I remortgaged while I was self-employed. It isn't a problem, unless for 'self-employed' he really means 'loafing around and sponging off others'.

    He's not trustworthy, can't deal with money and is probably lying to you. Don't lend whatever you do.
  • dealer_wins
    dealer_wins Posts: 7,334 Forumite
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    Lending him the money would be the same as gifting him the money, either way you wont see it back again lol
  • Murmansk
    Murmansk Posts: 929 Forumite
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    I'm no financial expert but I do know about First Aid and when you come across an incident the first thing you do is "check for danger" - no point you getting injured too.

    The same applies here - the danger is plain to see so avoid it
  • Blackbeard_of_Perranporth
    Blackbeard_of_Perranporth Posts: 7,605 Forumite
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    Close relative or ex friend. The choice would be to keep a close relative. Don!!!8217;t lend!

    Unless you say goodbye to your money!
  • nb73
    nb73 Posts: 91 Forumite
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    Protect yourself by offering to buy his house. He can pay off his loan with the money.

    You can rent it to him. When he has saved up enough, he can buy it back. But if he blows all the money on coke and hookers, you still have the house.
  • capital0ne
    capital0ne Posts: 872 Forumite
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    Never lend money to family (and friends) - if you really want to help just give them the money.

    That way you'll be doing a good thing and you won't fall out when the 'loan' isn't repaid.
  • Malthusian
    Malthusian Posts: 10,941 Forumite
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    nb73 wrote: »
    Protect yourself by offering to buy his house. He can pay off his loan with the money.

    You can rent it to him. When he has saved up enough, he can buy it back. But if he blows all the money on coke and hookers, you still have the house.

    The OP still stands to lose a lot of money if the "close relative" treats his rent payments in the same way as his loan repayments (highly likely given that the OP is open to emotional blackmail, which his bank isn't), and trashes the house, reducing its value or requiring the OP to spend a lot on repairs.

    Plus being a landlord, with all the legal responsibilities it entails, will consume even more of the OP's time and mental energy than being a creditor.

    There is no reason he can't sell the house on the open market and rent wherever he chooses. Unless the OP has a burning desire to go into business as a landlord they should not get involved.
  • MEM62
    MEM62 Posts: 4,754 Forumite
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    Trishy_M wrote: »
    He can afford the payments.

    Really?

    The secured loan and high interest rate suggests that the lender sees him as high risk. What makes you think you know better?

    You relative did not have access to mainstream borrowing at better terms or he would have taken it. He has already defaulted on this loan yet you are confident that he will pay you. Has the penny dropped yet?

    Just don't go there. You good intention is laudable but it will cost you big time.

    (And I am sure tour relative would have taken a mainstream loan if it was available to him at the time)
  • Trishy_M
    Trishy_M Posts: 12 Forumite
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    Thanks for advice, its what I would say to someone else. I have been ringing around and just to finish the thread if someone looks in future this is what I found to help with decision making.
    I have spoken to a solicitor (not all solicitors can do it so ask around):- There is enough equity in the property for the debt, I can put a charge on the house, the same as any other lender, to either pay the outstanding debt if it is sold or to force a sale if payments aren't made. The solicitor would draw up an agreement and pay the loan company directly. Cost is £500-600.
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    It's the potential cost to your relationship that's the longer term problem even if the money proves not to be.

    Having lent a considerable sum to my brother I can assure you all the grovelling, promises and clear plans of action before you lend out the money will soon be extended, excused and generally ignored to the point that what was agreed beforehand bears no relation to what happens after they've received it.

    The only way to do this properly is a cast iron financial arrangement via a third party which will cost you or them extra money as you've discovered and in my opinion and experience they will almost certainly then start to resent the repayments and the recipient.

    You might get lucky.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
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