Family loan and protection

Twiglet001

Hi,

My mom is lending me money to clear my credit cards and I will repay her an agreed monthly amount that is affordable but allows me to repay as soon as possible. There is no interest being charged. I only want to do this knowing that if I unable to work due to sickness/involuntary redundancy etc or I die that mom will get any outstanding money paid to her.

I appreciate that there are negative experiences of loaning between friends and family but I am committed to repaying the money and mom wants to help. I just want to safeguard as much as possible against unforeseen circumstances.

I suggested to her that we set up a written agreement and what I want to understand is whether this would stand as a repayable loan in my estate if I took life insurance. I believe establishing a trust is more complex but would enable me to specify the money goes to her.

Income protection or PPI for the loan value I would need to obtain be separately and assuming I have capacity then I could still manage the payments to her. However if anyone knows if PPI can be applied to a loan from a family member I would be interested to know this.


Thanks,

T

dealer_wins

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jonesMUFCforever

Twiglet001 wrote: »

Hi,

My mom is lending me money to clear my credit cards and I will repay her an agreed monthly amount that is affordable but allows me to repay as soon as possible. There is no interest being charged. I only want to do this knowing that if I unable to work due to sickness/involuntary redundancy etc or I die that mom will get any outstanding money paid to her.

I appreciate that there are negative experiences of loaning between friends and family but I am committed to repaying the money and mom wants to help. I just want to safeguard as much as possible against unforeseen circumstances.

I suggested to her that we set up a written agreement and what I want to understand is whether this would stand as a repayable loan in my estate if I took life insurance. I believe establishing a trust is more complex but would enable me to specify the money goes to her.

Income protection or PPI for the loan value I would need to obtain be separately and assuming I have capacity then I could still manage the payments to her. However if anyone knows if PPI can be applied to a loan from a family member I would be interested to know this.


Thanks,

T

How much are we talking about here?
How old are you? How old is your mum?
I could be wrong but if you can afford to pay for protection then you can pay more to your mum and clear it earlier.
Is there any reason why you cannot take a loan out to consolidate?

andyfromotley

Gosh that seems terrifically complicated for a loan between mother and daughter.

Accepting that loans between family members are tricky, just get on and pay it back. Unless we are talking a huge amount then if you die i think the last thing mum will be worrying about is her loan.

No idea about the PPI thing, again, surely you would just get another job and repay it.

How much is this loan???

Twiglet001

I'm mid 30s and she's mid 60s.

The loan is over 15,000...this is allowing me to consolidate but interest free.

I completely get re:last thing on mom's mind if I die but its not like she has lots of extra money, she's in a unique situation to help at the moment anpd I want to protect the money should I die before having paid a significant amount of it back.

I am more concerned about a situation where I cannot work than just being redundant I guess.

Thanks,

T

CHR15

If mum cannot afford to lose it, why not just forget the whole idea?
Let her enjoy life without the constant worry of listening to excuse after excuse about paying less this month but making up next month.

Nothing can protect your payments and even if such a product did exist, it would cost you more every month than the interest you are currently paying.

Just pay your own way out of your own hole, you spent it, don't drag family into it, no matter how polite they are being. Its your spending patterns which need addressing.

redpete

Twiglet001 wrote: »

I am more concerned about a situation where I cannot work than just being redundant I guess.

You could take out life insurance and critical illness cover for the amount of the loan. These would cover you for some of the circumstances that would mean you couldn't keep up the repayments. No idea if these would be cheaper than the interest though.

[Deleted User]

get income protection instead of ppi which will pay out the "insured amount" if you lose your job or become ill(after 30 days)

chesky

Whatever else you do or don't do, make sure you make a will.

Twiglet001

Thank you for your comments and advice, I will take it into consideration.

T

somethingcorporate

Seconded for the income protection insurance.

This means if you cannot work it will effectively pay your salary and it's not unreasonably expensive.

We pay about £25 a month each to provide the equilvalent of £50k salary each if we cannot work.