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    • SunnySeagull
    • By SunnySeagull 11th Apr 18, 12:14 PM
    • 2Posts
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    SunnySeagull
    Lend to my son
    • #1
    • 11th Apr 18, 12:14 PM
    Lend to my son 11th Apr 18 at 12:14 PM
    Hello - I'm new to the forum, so apologies if I seem a little green.


    I have recently inherited some money which I intend to draw down on during my retirement. I don't need the majority of the money for at least 5 years so one of the options I am considering is helping out my son who has a number of loans/credit cards.


    If I were to lend him 30k @ 3% per annum, this is already better than what is available in a 5 year fix savings account. However, in addition I would earn interest on the monthly repayment amounts of 580.


    This enables me to gain improved returns and my son to decrease significantly the level of interest for which he is liable.


    It all seems a little to easy, is someone out there able to point out any potential floors beyond the risk that my son doesn't pay?
Page 2
    • Malthusian
    • By Malthusian 13th Apr 18, 3:12 PM
    • 4,104 Posts
    • 6,431 Thanks
    Malthusian
    or, more accurately, the love of money is the root of all evil (1 Timothy 6:10).
    Originally posted by redpete
    1 Timothy 2:12 - But I suffer not a woman to teach, nor to usurp authority over the man, but to be in silence. For Adam was first formed, then Eve. And Adam was not deceived, but the woman being deceived was in the transgression. Notwithstanding she shall be saved in childbearing, if they continue in faith and charity and holiness with sobriety.

    Carries about as much moral weight as the bit about money.

    In fairness to him his financial problems began following a rather messy divorce
    Originally posted by SunnySeagull
    Do you mean he used to be 60,000 in debt but then got divorced?

    Divorce typically means you split the assets of the marriage. You may lose some of what was "yours" (although of course it wasn't "yours", it belonged to two people). It doesn't in itself mean you get into debt.
    • MallyGirl
    • By MallyGirl 13th Apr 18, 3:47 PM
    • 2,685 Posts
    • 7,687 Thanks
    MallyGirl
    Divorce typically means you split the assets of the marriage. You may lose some of what was "yours" (although of course it wasn't "yours", it belonged to two people). It doesn't in itself mean you get into debt.
    Originally posted by Malthusian
    It can. A good friend ended up in serious debt due to buying out his ex wife's claim on future pensions. He figured it was better to get clear from her and go through the financial pain as soon as possible, with a view to a more comfortable retirement.
    • Malthusian
    • By Malthusian 16th Apr 18, 9:43 AM
    • 4,104 Posts
    • 6,431 Thanks
    Malthusian
    It can. A good friend ended up in serious debt due to buying out his ex wife's claim on future pensions. He figured it was better to get clear from her and go through the financial pain as soon as possible, with a view to a more comfortable retirement.
    Originally posted by MallyGirl
    That would be very unlikely nowadays as it would be much easier to split the pensions via a Pension Sharing Order.

    Someone might still borrow money in order to retain a valuable defined benefit pension, but it's unlikely they'd be able to get a big enough loan.

    Your friend was only in net debt if you ignore the fact that his future pensions had a value. I know pensions can't be sold and don't have a value in the traditional sense. But a future income stream has a value which was almost certainly more than the amount he borrowed to pay off the ex.

    Let's imagine I divorce and we share an unencumbered house worth 200,000 and no other assets. I want to keep the house so I borrow 100,000 on a mortgage and my ex spouse walks away with 100k in cash while I have a 200k house and a 100k debt. It makes no sense for me to go around saying "I'm 100,000 in debt because of my divorce". My net assets are 100k. Now imagine that instead of a house I have a future income stream from my pensions, and if I didn't have those pensions and wanted to buy that income stream on the open market, I'd need 200k. Nothing changes.
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