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Lending to a friend
Hi, I am hoping for some advice please. I have offered to try and help a friend by loaning them a not inconsiderable sum of money to put towards buying their ex partner out of their jointly owned home. He will be getting a mortgage but cannot get the amount he needs so I have said I will see if I can 'top it up' for him.
What can I do to protect my money that I'm putting into his house? We have verbally agreed monthly payment terms and his plan is to pay it back in full when he remortgages.
What can I do to protect my money that I'm putting into his house? We have verbally agreed monthly payment terms and his plan is to pay it back in full when he remortgages.
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Comments
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Don't do it! That's the simple answer!Failing that, only lend what you can afford to lose.12
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jocat1504 said:Hi, I am hoping for some advice please. I have offered to try and help a friend by loaning them a not inconsiderable sum of money to put towards buying their ex partner out of their jointly owned home. He will be getting a mortgage but cannot get the amount he needs so I have said I will see if I can 'top it up' for him.
What can I do to protect my money that I'm putting into his house? We have verbally agreed monthly payment terms and his plan is to pay it back in full when he remortgages.
I suspect that if he couldn't get a mortgage for the whole amount, they won't lend to him what is required with this other loan being in play.
And what powerful_Rogue says.2 -
The mortgage company probably won't accept the application if part of the deposit also comes from a loan.
That aside, don't do it anyway....either give it to them as a gift or not at all.2 -
If you value the friendship then dont do it just don't.
If you value the friendship and your prepared to lose the money then yes go ahead and lend it.
What if say your friend stops paying for whatever reason or he decides to just disappear, woukd be prepared to take action to get the money back and potentially lose the friendship ?
OP we dont know the friend, you do, is he likely to not pay when he plans to ?
How long have you known him ?3 -
I agree with everyone else. Lending large or small sums of money to friends or relatives for any purpose whatsoever can be fatal. And you call it "a not inconsiderable sum" - don't do it. Unless you can truly afford to lose it. You may or may not get it back but money loans between friends is never a good idea. I say this as someone who once borrowed £30 from a friend. "Pay me back any old time", she said. A week later, the phone calls started. She needed the money and I'd told her I'd pay her back immediately, apparently. And the sum had increased to £40 for some reason. I repaid the £30 as I'd intended but we don't speak now.
This sentence in your post is worrying - "We have verbally agreed monthly payment terms and his plan is to pay it back in full when he remortgages".
With the best will in the world and the best of intentions from all concerned, it will not work.Please note - taken from the Forum Rules and amended for my own personal use (with thanks) : It is up to you to investigate, check, double-check and check yet again before you make any decisions or take any action based on any information you glean from any of my posts. Although I do carry out careful research before posting and never intend to mislead or supply out-of-date or incorrect information, please do not rely 100% on what you are reading. Verify everything in order to protect yourself as you are responsible for any action you consequently take.6 -
The mortgage lender probably will reject the application as theres no source for the deposit. They usually need bank statements to show the person. Has been saving and got the money from genuine sourcesMortgage free wannabe
Actual mortgage stating amount £75,150
Overpayment paused to pay off cc
Starting balance £66,565.45
Current balance £58,108
Cc around 8k.0 -
Sncjw said:The mortgage lender probably will reject the application as theres no source for the deposit. They usually need bank statements to show the person. Has been saving and got the money from genuine sources0
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I'm sure some lenders will accept a borrowed deposit - more likely if there is equity in the property. One for a mortgage broker to work out the fine details though.
I'd agree that loaning to friends often ends badly. You should have a formal agreement, and possibly a second charge over the property, though that could cost a bit to set up.0 -
Another one for "don't do it".
Banks spend lots of money assessing risk to ensure they will get a return on their lending.
If the banks won't lend him the full mortgage amount, then he probably can't afford it and when push comes to shove they will pay the mortgage lender over you.Life isn't about the number of breaths we take, but the moments that take our breath away. Like choking....1 -
jocat1504 said:I have offered to try and help a friend by loaning them a not inconsiderable sum of money to put towards buying their ex partner out of their jointly owned home.
Other than standing him a pint if he is short, friends and money do not mix.1
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