Loan from family/loan insurance

waterbaby2

Hello !


I’m new to the forums, so I hope someone can help please. (I was going to post in the section about cheap/alternative forms of loan insurance/PPI (payment protection insurance), but most posts seemed to be about cancelling/reclaiming it.) Apologies if someone has already covered this subject, or if I’m posting in the wrong place (I did try to do a search for relevant posts, but I’m disabled and very ill at the moment, so have difficulty reading a lot of information.)


My mother has raised the possibility of offering myself and my husband a loan, to pay off some/all of our debts without incurring further interest. Obviously, this would be an incredibly generous offer, as she would be losing potential interest on those savings, and I would want to make sure her money was safeguarded as much as possible (we would set up a regular standing order, and treat this as any other loan, other than not paying any interest):

- The debts are in my husband’s name (credit cards with very high APRs, overdraft), and incurred before we married (during the terminal illness of his late wife, providing extra care etc) – he is also the breadwinner as I am disabled.
- Does anyone know if there is any kind of loan/PPI insurance that can be taken out (to protect against unemployment/sickness etc), which would provide cover for an informal loan like this, rather than a loan through an institution ?
- Can anyone suggest anything else we’d need to take into account/do if considering an informal loan? eg Are there any kind of tax implications ?
- Also, as I would be a beneficiary under my mother’s will, are there any implications there if she dies before the loan is fully repaid ? (Which is a possibility, because of her age). I don’t know anything about inheritance tax, but I think the estate would probably come under any threshold ?
- Would the loan be better made to my husband only ? (I’m not sure of the complications in case of inheritance, or anything else.)
- If we decided to go for/could even get a formal loan from an institution instead (I think we would struggle, especially to get a decent rate that we could afford):

o if my husband died – he’s considerably older than me – would I then be liable for the rest of the loan repayments, especially if I inherit his (small) pension?

I realise I’m asking for a lot of detailed advice here, covering many areas...the previous posts I found, generally advised against borrowing money from family...so any advice or personal experiences either way would be much appreciated, and many thanks for your time in reading all this. (And apologies if it takes me a long time to digest/respond).

(I also just wanted to add that we’ve done a fairly rigorous budget/finances overhaul, to bring our spending within our income - particularly if we can reduce our repayments - but obviously with the current climate, who knows what may happen in the future....we haven’t defaulted on any previous loans or credit card payments, but my husband’s credit rating isn’t great, as he was very disorganised in previous years, and hadn’t set up direct debits for his credit cards, so had quite a lot of slightly late payments, and a couple of ‘arrangements to pay’ on a small amount years ago that are still in his file).

jonesMUFCforever

I doubt it very much whether an insurer would cover you in the circumstances you describe.
What you may wish to consider is income protection or sickness insurance - this would be made on a monthly benefit level rather than just to cover the loan.