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Private loan friend to friend to pay for a lease extension

edited 8 January at 12:41PM in Loans
82 replies 4.2K views
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  • BermoniaBermonia Forumite
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    I fear you would struggle to force the sale as only a second charge holder, the mortgage company would need to agree as the first charge holder and it is rare they would do this unless the mortgage is being defaulted on
  • Jami74Jami74 Forumite
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    Oh my goodness, what I would give for a friend or relative who had a spare £80k to lend! Or even a spare £20k for a deposit. I've never been unemployed and have never missed a payment, yet I've paid over £100k on rent over the last 14 years :( Saying that, I don't think I would be able to ask.

    OP, I hope your friends realise how lucky they are that you are willing to take such a huge risk for them with what, to most people, is a huge amount of money.
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  • XenonXenon Forumite
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    If you go through with this - make sure the contract is tighter than a Scotsman when it's his round in !

    In all seriousness

    Not a chance i would do this for family - never mind a friend.
  • edited 9 January at 3:02AM
    chucknorrischucknorris Forumite
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    edited 9 January at 3:02AM
    Xenon wrote: »
    If you go through with this - make sure the contract is tighter than a Scotsman when it's his round in !

    In all seriousness

    Not a chance i would do this for family - never mind a friend.

    I know there is risk, but they are in a dire situation, and I think if they get through this they will be alright in the future, if they don't it could easily be a downward spiral. With only 40 years left on the lease, I'm guessing that the cost of extending with increase by about £7-8k per annum.
    Chuck Norris can kill two stones with one bird
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  • edited 9 January at 3:16AM
    chucknorrischucknorris Forumite
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    edited 9 January at 3:16AM
    Bermonia wrote: »
    I fear you would struggle to force the sale as only a second charge holder, the mortgage company would need to agree as the first charge holder and it is rare they would do this unless the mortgage is being defaulted on

    Yeah I'm aware of this, I don't think that their mortgage is that much, probably about £55k so the mortgage company might be quite relaxed, as there is plenty of equity and of course it would be increasing the value of the property too (they don't live locally, I am going to visit them next week to the whole thing over with them). If it is an issue, I might have to take over the mortgage too, but I'm not sure about that, I'll worry about that if it becomes an issue. That might enable me to have more control if things did go wrong (but I haven't taken legal advice yet, so I do not actually know).
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • Voyager2002Voyager2002 Forumite
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    My father did something like this once for a good friend.



    As you can imagine, the friend was unable to maintain the agreed payments and the whole thing ended up in court. Fortunately the contract was water-tight and my father did collect his money in the end, but the whole affair was stressful and the friendship was lost.

    Two take-aways from this. Firstly, make sure the contract is water-tight and so ensure that a decent lawyer takes care of it, and of course make allowance for enforcement costs that could arise. And secondly, assume that the friend will fail to repay, putting their money ahead of the friendship.

    Having said that, what you are proposing could enable your friend to resolve a problem and avoid losing most of a substantial investment. You understand the property business and so have good reason to believe that what your friend seeks to do makes business sense.If things go wrong, you will at least know that you did your best and you can be confident that there will be sufficient money to repay you.
  • edited 9 January at 12:06PM
    Lover_of_LycraLover_of_Lycra Forumite
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    edited 9 January at 12:06PM
    Being Scottish I don't quite get this crackers leasehold carry on you have south of the border so I might be off the mark here.

    Can the lease extension not be done as part of the sale of the leasehold? Your friends start the process of buying the lease and assign the benefit to the buyer?
  • -taff-taff Forumite
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    I've got to ask, beyond an unshakeable [it seems] belief in your friendship, what on earth makes you think they will pay back 80k if they haven't paid back 5k?
    You have been burned once and you are going back for more.
    Thy can sell it without the lease extension, and let the buyer buy it. But they won't get as much money for it.

    And all the paperwork in theworld won't make someone pay you back if they don't want to.


    I mean, think about it. You have two unemployed people [ don't know the circumstances there] that have an investment property that they have failed to capitalise on properly by allowing the lease to fall, looking for outside investment to maximise their return from a person they didn't pay back money they originally borrowed from.
    I hope you're not back before long with a 'they didn't pay me back' thread.
  • SnowTigerSnowTiger Forumite
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    Do you think someone or something is trying to tell you something?

    MSE_loan_messages.png
  • chucknorrischucknorris Forumite
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    SnowTiger wrote: »
    Do you think someone or something is trying to tell you something?

    MSE_loan_messages.png

    Yes, but while I listed to everyone, I don't necessarily buy it. If I had followed what people thought I wouldn't have the wealth that I have now. While everyone was running away from property in the early 90's I was investing in it.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
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