lend a friend £90k, for property deposit

meer53 · 14 September 2017 at 8:12PM

Do it. It will be fine. Just don't be surprised when your bank accounts (and those of your "friend") are frozen, possibly closed as a result.

LABMAN · 14 September 2017 at 8:48PM

annandale wrote: »

You would lend someone 90 grand and not expect repayment? Sure you would.

I don't think they'd lend 90k in the first place (neither would I!) as they'd be fortunate to get it back. Borrower stands to make a whole lot more than £2k I suspect and can't do that without the 90k...needs to up the 2k 'interest' to at least 5-10k.

Mutton_Geoff · 14 September 2017 at 9:02PM

snickpan wrote: »

He's good for the repayments, this £90k will avoid him having a second charge against one of his properties, which would be at a whopping 8.4%, plus £1500 commission, plus £6000 arrangement fee.
This will ensure the property purchase goes through smoothly, he'll put that property on the market in order to pay me back, and he says he'll give me a couple of grand on top for my trouble, and I believe him. Trust is not an issue here, it's just how to do it properly.
Unfortunately he told the solicitor that he's being leant the money, and solicitor is saying that the lenders might not accept that!
Is it too late to just pop the money in his account, and he'll then say, "oh it's ok, I've just transferred this from my other account"?
If he had this years accounts, he could find other products, but time is an issue, can't lose a few weeks for accountant to pull his socks up, and then wait for the sa302 to come back...
For our peace of mind, what can a solicitor do to make the loan legally binding? What kind of price? Or could we knock up a bit of a4 and have it witnessed?

The best way to handle this situation is to download a standard unsecured loan agreement from an online firm like Netlawman or similar (not connected, just a happy customer). Also get your friend to take out a life insurance policy for the loan plus interest and set up a discretionary trust in your name (insurers do this free of charge).

Consider charging your friend a fixed amount of interest. "A couple of grand" on £90k is cheap and easy money. I'd suggest at least 5% for your time and trouble.

Yes, there is a risk you won't get it back, it will break a long friendship etc but only you can make that judgement call. There are plenty of people who have lent a mate much smaller amounts and been caught out. What value a friendship? Just because the overwhelming vote on a moneysaving internet site is no, that doesn't mean it's not the correct thing to do.

Good luck.

boliston · 14 September 2017 at 9:40PM

annandale wrote: »

You would lend someone 90 grand and not expect repayment? Sure you would.

I would gift what I could spare - if i had 90 grand to spare then I would gift it.

Ebe_Scrooge · 14 September 2017 at 10:07PM

Mutton_Geoff wrote: »

The best way to handle this situation is to download a standard unsecured loan agreement from an online firm.

Wrong - the best way to handle this is to say "No". Have you actually read any of the myriad of posts on this forum along the lines of "How can I get my friend to pay back what he owes me" ? Even with a written agreement, the odds of getting your money back from someone who owes you money are slim in the extreme. Why do you think that even the big banks, with their teams of lawyers, are so willing sell their bad debts to the "Knuckle and Kneecap Brothers" for a knock-down price ?

Mutton_Geoff · 14 September 2017 at 10:26PM

Ebe_Scrooge wrote: »

Have you actually read any of the myriad of posts on this forum along the lines of "How can I get my friend to pay back what he owes me"

Absolutely dozens of them, far more than I have ever seen that say "I lent my friend money and it all worked out OK" posted on here.

Then again, the internet, the news media, everything, seems obsessed with bad news (or fake news). People come onto this forum with the most complicated requests expecting help to be as simple as a post on a forum.

I have no doubt that a vast number of posters are just armchair whingers with no first hand experience of the issues but the best way to handle it is to look, listen and judge for yourself whether the situation will work for you.

"Listen mate, I've known you for 45 years, seen you almost every week of those years. You have helped me out many times. I have seen your integrity demonstrated to others on plenty of occasions during the time we have known each other. You have shown me a repayment plan that caters for the downside but due to your own circumstances, mainstream lenders either won't touch you or want 30-40% fees to cover you. If you don't acquire funds soon you will be in a much worse position and be forced to sell assets at a knock down price. I am in a position to help but, you see, I read all these posts on "MoneySavingExpert" from people whom I don't know who advise me not to help you".

I've just lent close to £100k to a mate. I'll be back in a year to tell you the good news.

Gambler101 · 14 September 2017 at 10:35PM

annandale wrote: »

You would lend someone 90 grand and not expect repayment? Sure you would.

Lend - yes, gift - obviously no

enthusiasticsaver · 14 September 2017 at 10:58PM

So this friend wants to borrow the deposit from you, and no small amount and then presumably borrow the rest of the purchase price from his lender. What is he putting into the deal? How does he expect to make enough in such a short time to clear not only the mortgage but fees and repay you with a bonus. I used to underwrite mortgages and yes if I suspected that someone was using borrowed money to put down a deposit I would either refuse a loan or reduce the amount we would lend them. So, I am sure will your friends lender and any solicitor who ignored that knowledge would be remiss. So making the loan legally binding will definitely reduce the amount he can borrow from the lender.

We gifted money towards deposits for both our daughters and in both cases we needed to write a letter saying it was a gift, we were not expecting any repayments and we had no financial interest in the properties they were buying. If you can sign such a letter then that will overcome the problem as far as your friend is concerned. Of course this probably means you won't see a penny back.

Blackbeard_of_Perranporth · 14 September 2017 at 11:05PM

PM me and I'll give you £3,000 profit.

Pyxis · 15 September 2017 at 6:20AM

Instead of loaning or gifting the 90k, why not go into partnership with him for this deal, and so share the profits from it?

Join forces with him to get the mortgage, etc., Share the risks but also the profits. That way you'll get your 90k back when the property is sold, plus a tidy bit on top for your trouble.

lend a friend £90k, for property deposit

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