Best way to get £5K quick?

Sarahbear666

Hi,

My mother in law is buying a new house and needs the money to buy the new one before the sale is completed on her current one. She needs to borrow £5K from us as she is unemployed, the rest of the money she's getting from a divorce settlement.
We don't mind lending her the money but not sure how to get it!
She'll only need it for approx. 3 months and will compensate us for any interest we'll have to pay, it's just that the bank are unlikely to lend to her.
So i'm thinking we get a loan with no early redemption fee?
Or is the early redemption fee not a problem?
I just need a quick and easy fix not necessarily bothered about getting the very best deal.
Any help would be gratefully received, i don't know whats best!

Thanks,

Sarah

Common_Sense_2

try your bank

Sarahbear666

Thank you for your quick reply - i can't get an appointment with my bank until Friday and was hoping for soem friendly advice sooner than that.
I'd call them but i rarely enjoy doing that!

somethingcorporate

The bank are the ones that know your financial habits / reliability best so assuming you are a good customer these are most likely to approve your loan and quickly.

Not going to use your own bank because you don't want to pick up the phone is stupid.

Sarahbear666

I'm sorry, i obviously wasn't clear - i will use my own bank of course and i do have an appointment with them on Friday. I merely wanted some advice on whether i ought to be worried about early repayment charges. I can't find any information on either of my banks websites as to how much this would be and therefore whether i would be better looking for a loan without them.
To say i don't 'enjoy' calling the bank was probably misleading - i work full time and have children to look after on my own all week, so finding time to call the bank is very difficult.
I apologise if this isn't the place to get friendly advice. My mother in law needs proof of funds available asap so i am merely tryign to get information as soon as i can within the limitations of my knowledge and time.

emmell

It may work out cheaper getting a loan with early repayment charges than getting a fast loan with exorbitant interest rates. You will have to compare.
ML.

paddyrg

Short term loans will usually have comparatively high fees and APR's associated with them, so borrowing for 3 months or 36 months may be similar fee-wise. As house-moves take a long time and sometimes go wrong, I would avoid a 3 month loan in case it takes 4 months and you get hit with charges and extra interest. Also, remember that you start repaying a loan (usually) the month after borrowing, so on a short loan, the payments may be very high compared with a longer one. Instead, how about a 36 month loan, more modest monthly payments, and suffering the redemption charge of an extra month or two of interest

Edit- I don't know how fast zopa and ratesetter (both .com) are, but they charge an upfront fee with no early redemption charges. I looked into this for another thread, ratesetter for instance will charge (assuming you are creditworthy) £50 (based on 1%, although this will vary with your creditworthiness) plus £5/month for their 'variable' market - and then the interest rate is something like 4.5% - pay it off as fast as you like. Could be competitive?

ILW

Overdraft would be the obvious answer.

chalkie99

I think this depends on your own finances.

Clearly you do not have the money put by to hand over to you so have to take a loan yourself.

If you take a loan are you in a position to make repayments until such time as everything is settled?

An example £5000 loan over 12 months incurs only £336.28 interest using the Marks and Spencer calculator so not really a life changing amount anyway. The point is, can you pay back the £444 per month from your own income?

What happens if the sale of her current home fails?

Have you read the rather frightening "Lending to friends and family" thread at the top of this page?

Is your credit rating good enough to get the loan yourself?

If the repayments are a problem and you are certain things will work out then maybe an overdraft would be a better option, but make sure you have a Plan B if things go wrong.

poppasmurf_bewdley

chalkie99 wrote: »

I think this depends on your own finances.

Clearly you do not have the money put by to hand over to you so have to take a loan yourself.

If you take a loan are you in a position to make repayments until such time as everything is settled?

An example £5000 loan over 12 months incurs only £336.28 interest using the Marks and Spencer calculator so not really a life changing amount anyway. The point is, can you pay back the £444 per month from your own income?

What happens if the sale of her current home fails?

Have you read the rather frightening "Lending to friends and family" thread at the top of this page?

Is your credit rating good enough to get the loan yourself?

If the repayments are a problem and you are certain things will work out then maybe an overdraft would be a better option, but make sure you have a Plan B if things go wrong.

This is VERY good advice. The big problem could come if the sale of the present house falls through. That was my first thought when I read your first statement. What situation would your Mother in law be in if it did? And what situation would it put you in? Is there no one else in the family who could loan this money without getting into debt?

What you are effectively doing is putting yourself in debt to help someone else out - very dangerous if things go wrong, as they frequently do in situations like this.

Thank very carefully before doing it. And when you've made up your mind, think about it again.

Read on here about lending money to friends and family, and find out what it could mean.

As an aside, in your second statement you say you're looking after kids on your own, and you're lending money to your Mother in law. I assume there is a husband on the scene? If not, that makes the whole thing very different.

Sarahbear666

Thanks for all of that, it's a lot to think about!

I don't know mine and my husbands credit rating - but we have never defaulted on a loan or mortgage and have only ever gone a few hundred overdrawn and not often. So i doubt we'd have problems getting approved.
We have about £3500 - £2K in an ISA and the rest in an easy access savings account - but as we'd have to borrow some anyway it seems easier to work out the interest she'd owe us if we borrowed the full amount together.
Saying that i hadn't thought about paying the monthly payments. We actually pay her £600/m to look after our son, but i'm not sure she could afford to live without that! But it's our 'Plan B' if she can't pay us back before we'll need the money for Christmas shopping!
If we go for a longer term loan for smaller monthly payments, is the early repayment fee likely to be higher/lower? I'm really ignorant in these cases tbh!
Overdraft? Can we really have an overdraft that high? That might be an option worth considering as it'll be quick and no repayments to make.

Thanks again for all your advice, it's really very helpful!