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Family Loan

System
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  • My in-laws extended their mortgage some years ago to encompass a £30k loan to help us expand our business. We agreed to pay back a monthly fee until it cleared the loan. We have never missed a payment and have already paid over half back. Now they are wanting the full £30k back and say we have only been paying the interest on it! We have not signed any paperwork and not actually seen what interest rates are on the loan itself which looking back now was pretty dumb. Surely there is no way the interest on an extended mortgage could be over 50%?! They have even been to my parents to ask for the money back which is just crazy as we don't have a very good relationship with my parents as it is!
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    edited 11 November 2020 am30 9:46AM
    Surely there is no way the interest on an extended mortgage could be over 50%?! 
    It  wasn't.  You're muddling your figures. You'd need to have paid half the sum in a single year for that to be the case.  You can work out the APR from your payments, the term so far and the amount borrowed.

    Time for a family discussion with tea, biscuits and alcohol.
  • My in-laws extended their mortgage some years ago to encompass a £30k loan to help us expand our business. We agreed to pay back a monthly fee until it cleared the loan. We have never missed a payment and have already paid over half back. Now they are wanting the full £30k back and say we have only been paying the interest on it! We have not signed any paperwork and not actually seen what interest rates are on the loan itself which looking back now was pretty dumb. Surely there is no way the interest on an extended mortgage could be over 50%?! They have even been to my parents to ask for the money back which is just crazy as we don't have a very good relationship with my parents as it is!
    This should be a new thread, and would benefit from some extra clarity / details.  In particular, I am not sure who all the "they" are.  What is the full amount of the mortgage that your parents have?  You say you don't have a very good relationship with your parents, yet your parents were willing to "front" a loan for you and lend £30k - that is quite good going really.
  • macman
    macman Posts: 53,128 Forumite
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    Did you agree to even pay interest on the loan? The fact that you have no idea what the interest rate is would indicate that you did not.
    If you have an agreement to pay £x per month until it's cleared then that is binding: they can't just demand the balance owing now in one hit.
    However, the problem with this type of verbal arrangement, as you are now finding out, is proving what was actually agreed, without any documentation. For a business loan of £30k, it is positively reckless.
    No free lunch, and no free laptop ;)
  • I just wonder if the mortgage that the family took out is now on a SVR and they are struggling to re mortgage due to either age or their own financial circumstances?
  • Exodi
    Exodi Posts: 3,435 Forumite
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    people are not really going to post  on here about how they lent their brother £5000 and he paid them back as agreed and took them for a nice meal to say thanks, are they?
    It's humourous that this was followed by: 
    My in-laws extended their mortgage some years ago to encompass a £30k loan to help us expand our business. We agreed to pay back a monthly fee until it cleared the loan. We have never missed a payment and have already paid over half back. Now they are wanting the full £30k back and say we have only been paying the interest on it! We have not signed any paperwork and not actually seen what interest rates are on the loan itself which looking back now was pretty dumb. Surely there is no way the interest on an extended mortgage could be over 50%?! They have even been to my parents to ask for the money back which is just crazy as we don't have a very good relationship with my parents as it is!
    This is a perfect example of why money and family shouldn't mix. This poster doesn't even acknowledge that any interest should have been paid and is already hinting that they "have not signed any paperwork" - I think we all know where that's leading... On the other hand, I can somewhat agree that this poster shouldn't just blindly shovel money at this debt until the end of time without any understanding of what the balance is.

    To be frank, it's quite shocking that no formal agreement was drawn up for a £30k business loan...

    The reason that people recommend people not to lend family money is not because the majority of people don't pay it back (I'd imagine the opposite is true), it's just there's not really much benefits if they do, whereas it causes unparalled family ruin and disaster if they don't. Why risk it? Plus there's the element that people usually only ask family to borrow money if they've exhausted every other channel...
    Know what you don't
  • Ergates
    Ergates Posts: 2,790 Forumite
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    macman said:
    Did you agree to even pay interest on the loan? The fact that you have no idea what the interest rate is would indicate that you did not.
    If you have an agreement to pay £x per month until it's cleared then that is binding: they can't just demand the balance owing now in one hit.
    However, the problem with this type of verbal arrangement, as you are now finding out, is proving what was actually agreed, without any documentation. For a business loan of £30k, it is positively reckless.
    Reckless on the part of the il-laws that is, not the OP.
  • Ergates
    Ergates Posts: 2,790 Forumite
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    Grumpy_chap said:
    You say you don't have a very good relationship with your parents, yet your parents were willing to "front" a loan for you and lend £30k - that is quite good going really.
    The loan was from the OP's in-laws, the not-very-good relationship is with the OP's own parents.
  • Grumpy_chap
    Grumpy_chap Posts: 17,067 Forumite
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    Ergates said:
    Grumpy_chap said:
    You say you don't have a very good relationship with your parents, yet your parents were willing to "front" a loan for you and lend £30k - that is quite good going really.
    The loan was from the OP's in-laws, the not-very-good relationship is with the OP's own parents.
    Thanks - I had read that wrongly
  • macman
    macman Posts: 53,128 Forumite
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    Ergates said:
    Grumpy_chap said:
    You say you don't have a very good relationship with your parents, yet your parents were willing to "front" a loan for you and lend £30k - that is quite good going really.
    The loan was from the OP's in-laws, the not-very-good relationship is with the OP's own parents.
    It's reckless by both parties. You don't put £30K into a business venture without knowing how much you have to pay back, and when.
    No free lunch, and no free laptop ;)
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