Loan to Friend-what shall I do?

David301

To quote Mr Chumley Warner

Mr_bob

How stupid is al this, I feel awful for being so negative even though all the advice supports my objections, saying, its a bad idea.

glentoran99

poppasmurf_bewdley wrote: »

The fact that the 'friend' needs £3k to bolster their deposit on a mortgage is a clear indication to me that the 'friend' is overstretching him or her self on the purchase of a house.

If they can't get the deposit together without borrowing, then how can you be sure they can afford to meet the regular commitments required to buy and own a home?

Also, the fact that the 'friend' only contacted your wife instead of both of you would be another indication to me that all was not well.

Approaching anybody like this smacks of desperation where all other avenues have been closed off to the 'friend'.

Well you have put 2 & 2 together to make 17!


Just because they need 3k to make up a deposit doesn't mean they are over stretching themselves for the ongoing mortgage

AnotherJoe

No but it does indicate at best, extremely poor planning on their part that they haven't catered for all the costs of the mortgage and have no contingency funds nor any family members either willing or able to help.

ChemistDude

Why would you give £3,000 of your hard earned money to anyone? Don't you have children who may need help with driving lessons or contribution towards uni costs etc? If you give your money away like that now what will you do when perhaps your financial situations changes down the line from perhaps illness etc. Keep your money for your family.

henrik1971

glentoran99 wrote: »

Well you have put 2 & 2 together to make 17!


Just because they need 3k to make up a deposit doesn't mean they are over stretching themselves for the ongoing mortgage

Agreed. We were in a smilar position a few years ago. We asked parents to lend £7k to bolster our house deposit. The LTV and affordability was tight due in part to my wifes wage not being able to be taken into account as she had just left one job and started another. The extra £7k would have meant we could get a mortgage rate at 2% lower with a different lender, reducing the yearly interest payable by almost £2400. Over a five year fixed rate that would have saved us £12k in additional interest. We could have paid back the £7k in 2-3 years with the saved interest money, and had the extra equity.
Long story short, parents were not comfortable to do so (despite being very able to do so), so we took the mortgage at a higher rate and have just had to go with it. We have been able to afford the higher payments, but just seems like a missed opportunity to me. Regrettable all round, I'd say.

glennstar

Mr_bob wrote: »

How stupid is al this, I feel awful for being so negative even though all the advice supports my objections, saying, its a bad idea.

There appear to be quite a number of souls herein that feel it is appropriate to SoapBox rather than assist. I know it's a little tedious but let's go back to the basics.

1. it's a good friend of your wife's (for any given value of "good friend"),
2. you can afford the loss (I think you stated this in your original post),
3. you don't need this ill advised action to come between you & your wife,
4. you are;
   • happy to appear magnanimous in the event that things bomb,
   • happy to have been the supportive party if things pan out - with a likely caveat that we probably don't need to do this again any time soon

Consequently, write the cash off, hope for the best, expect the worst and move on.


Look back at this in 10 years time and ask yourself "was £3k worth jeopardising my well being, happiness and marriage?". If the answer is not a resounding "NO" then you probably have more issues than this forum can assist you with.

Mr_bob

AnotherJoe wrote: »

Let us know how it works our Mr Bob.

Never got the telephone call from the friend The wife and I have since discussed it and have fallen out over it. Not sure where to go with it.

breaking_free

So the loan hasn't yet been made but you and the wife have already fallen out over it. That's a good enough reason to cancel this transaction before it has been made.

In your shoes (and I have been there) I would go directly to the wife's friend and explain that the request for a loan is causing arguments between you and your wife. At this point the friend should gracefully withdraw her request.

If she doesn't withdraw I would then go back to your wife and say quite directly "Your friend knows this has caused us to fall out and she still wants to go ahead. I am not impressed by a friend who is determined to get money at the expense of your and my marital happiness" (or words to this effect).

When this happened to me I explained to my partner's friend that I was not happy to loan money and the friend immediately dropped the request.

yasmin2

You have fallen out with your wife before the loan was even made - don't do it... You don't want it to cause even more.

Also £3000 is a LOT of money whether you can afford to lose it or not. What if friend is not able to pay you back causing further arguments between you and your wife?