Risk of paying off a debt for a relative during house purchase?

brazillondon

I'm buying a house with my partner, with the mortgage application being accepted, the survey complete and satisfactory - with the process now being down to solicitors.

A relative now desperately needs us to pay off a debt collection agency for him (£4000), with the money being paid back to us from him in two weeks time. Importantly, the money I lend comes out of the money for our deposit/stamp duty. Now I trust that this will be paid back, but my question is:

Am we putting ourselves at significant risk here?

(will an updated bank statement be requested for example by the lender or solicitors, with the payment to a debt agency seen, then questioned, then the whole process delayed or risked while it's looked into?)

I thought I'd ask here for a perspective from less emotionally tied people.

thank you!

jbainbridge

What makes you so sure they will find 4k in two weeks time if they can't find it now?

You seriously risk losing the house. Worst case would be you exchange contracts and then dont have the funds to complete which really leaves you in a mess.

moneyistooshorttomention

Don't do it.

When you say "relative" - you dont indicate how close a relative it is and my feeling is that it is someone less close than a parent for instance. In which case - they arent close enough for you to even be thinking this way.

Cousins, siblings, etc - fend for themselves - or get helped by other relatives.

Parents - more understandable - but I must admit my mind boggles every time a responsible person has parents lacking in responsibility (ie at their age).

Whatever the level of relationship - do NOT do it. I honestly cant see them finding that money over the course of the next two weeks. If you lend them your money which you need for this - I strongly doubt you would see it again and they would have lost you your house. What sort of relative would see you lose a house you have waited/worked so long for?

I've watched (very close) relatives inveigle someone into "lending" their house money to another relative before now. I was gobsmacked. The person concerned then couldnt buy a house after all for literally years because they agreed to that request.

marliepanda

If he can prove he'll have the money in two weeks, then the debt collecting company will probably give him two weeks. Unless he's already had a ridiculous amount of time, and if that's the case, I doubt in two weeks hell have 4K

brazillondon

Thank you for the responses, it's appreciated.

The relative is in a high paying role, and I trust that the money will be returned in two weeks time. The need for the funds now happens to be pretty urgent, and delaying it does not appear to be an option.

My concern is specifically more to with having payments to a debt collection agency on our bank statements and the risk of that disrupting proceedings going further. I'm hoping that, provided the money is indeed paid back in two weeks time - that it won't be checked or questioned - and if it is, our explanation will be accepted and it won't require potentially days/weeks of having to prove the scenario.

agrinnall

I wouldn't risk it at this stage of your purchase. The obvious answer is for your highly paid relative to get a short term loan, plenty of payday lenders out there who will be happy to do business with him.

frugalsmurf

If you decide to help, can't you transfer funds to him for him to pay collection agency if you're worried about paying an agency showing on your bank statements.

Has he proof he will definitely get the money?
Is he getting paid in those 2weeks?

I'd be wary as I had a relative who got paid and debt companies took his wage before he got to it (pay day loans)

I can see you want to help but you risk losing your house if it goes wrong.

Having been in debt myself (&getting a ccj ) , you learn by your mistakes. I'd never get into such a mess again as it scared me getting in so deep. If I hadn't have got in so deep then it would've carried on. Does your relative need the lightbulb moment? Will it just continue if you help.?

Obviously I don't know you/your relative so I can only say that as an outsider

CLAPTON

brazillondon wrote: »

Thank you for the responses, it's appreciated.

The relative is in a high paying role, and I trust that the money will be returned in two weeks time. The need for the funds now happens to be pretty urgent, and delaying it does not appear to be an option.

My concern is specifically more to with having payments to a debt collection agency on our bank statements and the risk of that disrupting proceedings going further. I'm hoping that, provided the money is indeed paid back in two weeks time - that it won't be checked or questioned - and if it is, our explanation will be accepted and it won't require potentially days/weeks of having to prove the scenario.

it's a huge risk for you : your lender may or may not do another check : they may think that you have been less than honest with them and you may find you have a fraud marker on your credit file

AdrianC

brazillondon wrote: »

A relative now desperately needs us to pay off a debt collection agency for him (£4000), with the money being paid back to us from him in two weeks time. Importantly, the money I lend comes out of the money for our deposit/stamp duty. Now I trust that this will be paid back, but my question is:

Am we putting ourselves at significant risk here?

You're in very serious risk of never seeing your £4k again.

Never mind the mortgage lender - can you still afford to buy the house without it?

AnotherJoe

brazillondon wrote: »

Thank you for the responses, it's appreciated.

The relative is in a high paying role, that hasn't stopped him getting into this debt problem has it! and I trust that the money will be returned in two weeks time. You may "trust" it but the fact he needs it so desperately doesn't bode well at all. The need for the funds now happens to be pretty urgent, and delaying it does not appear to be an option. It is for you and the urgency isnt yours. How did he get into this mess despite being in "a high paying role" and let it get so bad?

My concern is specifically more to with having payments to a debt collection agency on our bank statements and the risk of that disrupting proceedings going further. One you should be very concerned about. I'm hoping that, provided the money is indeed paid back in two weeks time "hoping" "provided that" - lots of ifs buts and maybe's here - that it won't be checked or questioned - and if it is, what if it isnt? our explanation will be accepted and it won't require potentially days/weeks of having to prove the scenario.

Importantly, the money I lend comes out of the money for our deposit/stamp duty. Come on, you know this is barking.

You are trusting a heck of a lot here, and on that trust balances your house.

He should go to a P2P lender where he can get the money for a few weeks.
Or do something else that doesn't involve you. The mere fact he'd even ask someone in your position shows what a mess he's in and he may even be lying to you, like a drug or a gambling addict people who swap big debts around will have no compunction about lying to get their money. Or he may even believe it himself until the next crisis occurs in two weeks tiem and then he'll be really sorry he screwed up your house purchase.

Just tell him that you can help him out when your house has closed but until then you cannot risk it. Point him at a P2P lender.

Do Not Do This.

PixelPound

okay, putting to one side that you will get £4k back on time and that the debt collection agency won't wait, you run the risk of falling foul of the anti money laundering rules. You will have to show where you got the £4k from and need statements from your relative as to where they got the money from. Lending £4k out and getting it back 2 weeks later will ring alarm bells. Even if you had sufficient funds to not be dependent on the £4k for deposit, you would most likely have to still show a paper trail of how the money got to you (its irrelevant that its paying back what you lent).

Ask your conveyancer if its okay to do it, because they have to sign off on the money laundering checks, and see what they say. I'm sure it will be no under any circumstances.