Advice on lending money to a friend

Errata

the money would be used for him to finish works on his flat (a right to buy council flat, which looks like a building site inside, debris everywhere, holes in plaster, no kitchen, etc). He can plug away at fixtures and fittings, painting and decorating (he's very practical), but he needs to do (afford) a few big jobs first (e.g. new boiler). It's really getting him down – the state of the place and the fact he's tied down, he'd like to change job but can't move as the flat's condition is unsuitable for sale or renting out.

He knew all that when he bought it. If he didn't realise it was a long term project when he bought it, he doesn't sound like a good financial risk. Why isn't he applying for a loan?

Sambucus_Nigra

noisla wrote: »

For the avoidance of doubt, I would want no claim on his flat, once done – just a simple loan.

For the avoidance of doubt, you DO need a claim on his flat if you loan him the money. Make sure the papers are drawn up accordingly.

However; if he does not pay it back, you have no money for your deposit, no way of getting the money off him until he sells, and will be in a worse state than him with no property AND no savings.

Don't do it. He needs to sort his own shizzle out for now...

backinbusiness

read the thread "lending money to friends and family" and then run away with your knees hitting your chin!

DON'T do it!

bib

noisla

Thanks for all the advice. I think LovelyLeeds' advice is the most interesting - about it impacting on the dynamics of the relationship. I'd not thought enough about that, thank you.

I have thought about the monetary aspect and would clearly be prepared to 'lose' the money - in fact I'd just give him the money if that wouldn't insult him and end the relationship for sure. (I'm an accountant with Scottish roots so boringly sensible/aware with money!) Suggesting helping him budget or joining him on a period of austerity (e.g. never eating out and giving up all drinking) seemed to go down worse than the loan idea - more patronising, less independent, trying to change him? He said he felt like I saw him as a "project". Perhaps I do. It'd give me great pleasure and help balance the enormous help he's been to me, so perhaps I'm really being self-serving.

In answer to some of the points... He wouldn't take a loan as he wouldn't want to get into debt (bar the mortgage). I think he was sensible in taking the (only?) opportunity to get on the housing ladder - he got quite a discount under the old right-to-buy, mortgage is sensible, the DIY aspect should be a doddle for him, if he could afford the boiler and stop working all hours in his day job. He has a garage full of radiators, kitchen units, etc - he is getting there himself, but slowly. I should probably leave him to go at his own pace. The only real 'rush' has come from the fact we live apart and on top of that I might move away for a new job. I think he feels a bit trapped. But that's all a separate bunch of issues to consider in a young relationship...

ashaput

LovelyLeeds wrote: »

I've done it and lived to regret it. Believe me you will be the last person he pays after all his other outgoings.

That is completely true. Been there but it was my bestfriend. When she had some money, she kept buying all the things she needs and dropped me easily with these words "Sorry I can't pay off my debts because I need to buy makeup and clothes, and those girls stuffs. I know you earn bigger money than I do, and you also have savings. So please understand me"
Well no, I can't uderstand that. OP, you may need to think it twice. Just don't want you end up with regrets.

Sambucus_Nigra

noisla wrote: »

Suggesting helping him budget or joining him on a period of austerity (e.g. never eating out and giving up all drinking) seemed to go down worse than the loan idea - more patronising, less independent, trying to change him? He said he felt like I saw him as a "project".

ROFL. Bless him. Yes, why should he have to budget :eek: and give up drinking :eek: to fund his own house when he could get you to fund it with no stake in it :D

No wonder it went down badly.

twistedhazel

noisla wrote: »

In answer to some of the points... He wouldn't take a loan as he wouldn't want to get into debt (bar the mortgage).

Sorry to be blunt but he will be in debt....TO YOU! If neither you nor he see this loan as a debt then realistically you'll never see all this money repaid as there will always be something to take precedent over the repayments.

antrobus

noisla wrote: »

In a nutshell – I would like to lend £1-3k to my boyfriend. I have every confidence that he would use the money as intended, could afford to repay me, and would repay me even if we split up. ... I am not blinded by the new relationship – I would get satisfaction from helping out any friend financially, and I am prepared (mentally and financially) for not getting the money back.

Fair enough. You're going into things with your eyes open.

If you want to put the proposed loan on a formal footing, I'd type 'loan agreement template' into Google - there appear to be a number of resources out there.

27col

It seems to me, that if you can afford to lose this money (which is quite likely to happen), then go ahead and let him have it. If he defaults then you are not going to get it back.
I can see his logic, why get a loan when you can get someone else's money. With less likelihood of being pursued by debt collectors.

somethingcorporate

If he doesn't see borrowing money from you as being a loan or debt and is not willing to make sacrifices to pay it back then run for the hills!!