lending some money to a close friend

xyz111

hi 
i am lending some money to a close friend for contribution to down payment for his mortgage loan.
to just be on  a safe side, given economy outlook, how can i get this is formal writing which is credible evidence.
is there a free template/service to use. thanks

Ryan_Holden

Don't do it. The forum is full of topics of people who have been stung. It rarely ends well and usually costs you the money and a friendship.

Can't offer any better advice than this:

sourcrates said:

You can lend them the money by all means, but nothing can protect you from them not repaying you.

No amount of agreements, legal action or anything else can force them to pay you back, if they don`t want too, or can`t for some reason.

Lend on the basis that it`s a gift that might be repaid one day, or don`t do it at all.

i.e. even if it went tits up and you had an agreement and you took them to court you are still never guaranteed to get your money back.

Just don't do it. Save yourself the strain.

Penguin_

You friend may struggle with their mortgage application if this isn't declared entirely as a gift which isn't scheduled to be re-paid.

Don't lend to friends, it rarely ends well.

mr_stripey

everyone will probably tell you same thing - don't do it. 

You will probably lose some, or all, of your money and your friendship

If you friend is asking you for a loan, it is most likely because they cannot obtain credit elsewhere,

Even with a formal agreement, if they stop paying you will have difficulty in forcing them to pay.

Keep_pedalling

Your friend will find it impossible to get a mortgage when he is depending on a loan to make up the deposit. 

MalMonroe

Hello, here is another exclamation of 'DON'T DO IT!!' 

Ryan_Holden, above has hit the nail well and truly on the head - plus, sourcrates' advice within that post is spot on (as usual).

There's absolutely NO way that you can guarantee to get anything back at any time, no matter what you sign, where you sign it, when you sign it or who witnesses any signing.

If someone cannot afford to pay a deposit for a mortgage then that, unfortunately, is their problem. They will have to save up or take other steps to do so. I would love to own my own property but I would never borrow from anyone in order to do so.

With the best will in the world, anything could go wrong. But obviously if you wish to gift your friend the deposit, then that'd probably be a different matter.

But in the main, borrowing and lending money is the way to encounter disaster and lose friends - close or otherwise.

CliveOfIndia

Just to echo the above - feel free to give the money as a gift with no expectation of it being returned, but DON'T "lend" it to your friend.  That's a sure-fire way to lose both the money and the friendship.

And quite apart from anything else, if the mortgage company ever found out that the deposit came from a loan it would cause all sorts of problems for your friend.

DullGreyGuy

If you give it as a gift then your friend can use it towards their deposit and you dont have to worry about if they are going to pay you back. Expect to have to sign something to say its a gift and you have no expectation of repayment. Your friend can naturally promise to return it anyway and may well do so even if they dont but this would be unenforcable. 

Lending your friend money wont help them with their deposit as the lender will discredit from their calculations but include it in the affordability checks and so worst of both worlds. Look at how many people announce how they've managed to get loans written down or off... thats professional lenders with proper risk assessment tools and experienced at debt recovery, yet you believe there is a mechanism that would guarantee repayment of your loan?

Never lend to friends and family... gift it and hope you get it back over time in one way or another.

Ryan_Holden

So just to answer your question as well:

It doesn't matter what document you use, what template you use, nothing can guarantee you your money back.

Best case you end up taking them to court and they get a CCJ and you get a fiver a week for the rest of your life.

Sorry we are all negative Nellies but this is just such a common occurrence here, you may feel like a !!!!!! for denying your friend, but unless you're prepared to give the money away then it could very well save you both heartache downstream.

Herzlos

You can't use borrowed money for a mortgage deposit, so they'd almost certainly need evidence to provide to the mortgage broker that it's a gift.

secla

Also a lot of mortgage company's wont accept gifts from anyone but close family members