How to loan money to partner 20 August 2021 at 10:48AM in Loans 27 replies 2K views

Hollah21

Advice needed:

My partner is paying about £100 in interest on approx £5000 of debt a month. I have the money to loan him to clear off that debt and instead he can pay me back monthly. It makes sense rather than loosing the interest! We would make a written arrangement, even though I have no doubt at all that he would always pay me back.

I was wondering though does anyone know how a mortgage lender would view this? Would they want to see the agreement to know I have that much money owed back to me? Or would they count that as not guaranteed? I am planning on being a first time buyer at some point whilst he would be paying me back. 

Thanks for any help. 

Ebe_Scrooge

Aside from the oft-repeated advice that you should never lend money to friends and family ......

The money owed to you by your partner, even if backed up by a legal document, would not be counted as an asset as such, purely because you have no guarantee of receiving the money.  No different to when a bank lends you money - they have no cast-iron guarantee that they'll get the money back, they always carry the risk that you'll default.

bargainbetty

Do you live together? Would you be buying the property with him as a co-mortgagee? if not, and you have no other financial links, I heartily recommend that you read a selection of the threads on here about the numerous partners, best friends, family members and others that have sworn on their souls to repay monies loaned and have then failed to do so, causing permanent and irretrievable damage to relationships. 

Just don't. Your partner needs to fix their own situation, perhaps by applying for a 0% credit card or suchlike. You are not financially responsible for them and even if they sign a piece of paper, if you break up you will struggle to get the money back. 

Jami74

Hollah21 said:

Advice needed:

It makes sense rather than loosing the interest! We would make a written arrangement, even though I have no doubt at all that he would always pay me back.

I don't know how far along on your life journey you are, but as someone who did exactly this nearly 30 years ago I would say.....don't.

Yes we've had lots of love and laughter over the last 30 years. No, we never got our mortgage. In hindsight I should have remained financially independent but I knew no different. I copied what my parents did and thought that being joint in everything was the only way. Sure, buy him the odd drink, lend him the odd tenner, help him sell unwanted items and make sensible shopping choices, but unless you are willing to give the money away and spend the rest of your life subsidizing him then look after your own money and keep your mortgage deposit in tact.

tacpot12

The fact he is paying £100 per month in interest rings alarm bells for me. He must either have borrowed from a loan shark and be paying 25% APR! Or he is not telling you the truth. If he isn't telling you the truth, you will lose any money you lend him as he isn't honest.  

The interest on a £5000 loan over two years at 8% APR is about £30 per month. Over a longer period it will be less.

He can borrow £5000 from Tesco over 2 years at 3.4% and will pay £7 in interest per month.  

[Deleted User]

tacpot12 said:

The fact he is paying £100 per month in interest rings alarm bells for me. He must either have borrowed from a loan shark and be paying 25% APR! Or he is not telling you the truth. If he isn't telling you the truth, you will lose any money you lend him as he isn't honest.  

The interest on a £5000 loan over two years at 8% APR is about £30 per month. Over a longer period it will be less.

He can borrow £5000 from Tesco over 2 years at 3.4% and will pay £7 in interest per month.  

Pay day loans perhaps, unapproved overdraft that sort of thing

femalemonarchfemalecanine

tacpot12 said:

The fact he is paying £100 per month in interest rings alarm bells for me. He must either have borrowed from a loan shark and be paying 25% APR! Or he is not telling you the truth. If he isn't telling you the truth, you will lose any money you lend him as he isn't honest.  

The interest on a £5000 loan over two years at 8% APR is about £30 per month. Over a longer period it will be less.

He can borrow £5000 from Tesco over 2 years at 3.4% and will pay £7 in interest per month.  

some may be able to borrow at those rates, but possibly not this person. there are many lenders that will charge that amount and it's not loan sharks or lies necessarily.

Mojisola

Hollah21 said:

My partner is paying about £100 in interest on approx £5000 of debt a month. I have the money to loan him to clear off that debt and instead he can pay me back monthly. It makes sense rather than loosing the interest! We would make a written arrangement, even though I have no doubt at all that he would always pay me back.

Before you decide to go ahead with this, insist on complete financial disclosure.

You need to see all accounts and evidence of the debts.

Aspiration

Please, please do not do it! Been there, done that and thousands of £££ and plenty of bad feeling to go with it. 

mcpitman

Assuming you are young and not in a permanent relationship I would say definitely do not lend your partner money.

Keep that 5k for your deposit when you become a FTB.

Help your partner by assisting with some suggestions, can they over pay, are they able to get a 0% CC with a money transfer option to pay off the loan?

Help them by cutting down on nights out and fancy things in life together.

Establishing a good line on this now will do your relationship good for the future.

frankglemstone

I think you've better give them as a gift than actually lending money to your significant other