lending money to sister in law

[x5x3]

basically she is about to buy a property but is short of cash due to change of career (cannot get a big enough mortgage as now self-employed, etc, etc).

I'm thinking we should get some legal papers drawn up and own x% of the property, she wants a cash loan to be repaid.

Thoughts?

yes?

no?

maybe?

[Burrito]

Not worth the potential hassle.

[Gargamel]

Depends how much and relevant the money is to you. If it £5k and you're a millionaire then just go for cash, but if it is your life savings, then insist on some guarantee.

I don't think the mortgage company will allow a separate charge against the property, they lend based on the whole value. not with someone else having a share.

[J4K UH]

Don't do it. Lending money to family only ever leads to problems!

[bigandclever]

You're mad.

If you can afford to give it to her and walk away, then go for it. Otherwise she can go to a bank and get her loan ... what do you mean 'they won't lend it to her because there's too much risk'?

Edited by bigandclever on Saturday 10th November 20:09

[derektrimblitz]

Is she fit?

[Butter Face]

As above, depends on how much.

Any other assets? Car?

[Spitfire2]

Don't do it. If there is any expectancy on her part that you should - then DEFINITELY don't do it.

[14-7]

Depends on how well you get on with her.

I would lend money to my brother, parents and one of my cousins purely because I know they would also have my back. No none else.

[ellroy]

No, No and thrice No.

The mortgage firm will undoubtedly take a dim view of a second charge, so that could cause issues anyway.

Other than that what legal charge would you have that would be enforceable if, and when, it goes tits up?

Leave it well alone.

[x5x3]

lol - I am aware I may be mad thanks!

She has some savings, we would be putting up maybe 15% of the purchase price.

- If the mortgage company will not allow us to "own" 15% of the property (I think that is what you are saying?) then it does indeed sound like hard work.

Thanks for the replies all - some more helpful than others - but then this is PH and fully expected

[ellroy]

Yes, second charge means someone else has lent money against the property, and has a call if payments cannot be maintained. Effectively, what you'd be doing, unless it was unsecured on your part. Which would be utterly mental.

Its generally not looked on favourably. For obvious reasons.

[x5x3]

ellroy said:

Yes, second charge means someone else has lent money against the property, and has a call if payments cannot be maintained. Effectively, what you'd be doing, unless it was unsecured on your part. Which would be utterly mental.

Its generally not looked on favourably. For obvious reasons.

thanks - i assume the only other way to do it then would be a joint purchase - with a joint mortgage?

[Changedmyname]

I have done this and 8 years later ,still waiting.
OP your choice but, IMO No.

[Wacky Racer]

It will almost certainly end in tears.........yours.

But you'll probably go ahead and do it anyway..........

[Gargamel]

Could you act as guarantor to the mortgage, thereby not committing any actual cash, but promising to do so if it goes badly. The mortgage company might accept that?

[stevensdrs]

Unless you can afford to lose the money or make it a gift then DON'T go there. The truth is if she can't get a mortgage for the whole amount then she can't afford the house.

[northandy]

As others have said, only do it if you can afford to never see the money again.

If its a gift, fine go ahead, a loan will not be paid back.

[2lefthands]

Slightly underhand towards mortgage lender, but lend the money to her, then slap an uncontested charge on the property after completion? Mortgage lender cannot contest if it can be shown to be less than the their % value of interest at recent purchase price.

[VinceFox]

northandy said:

As others have said, only do it if you can afford to never see the money again.

If its a gift, fine go ahead, a loan will not be paid back.

This is spot on. "lending" to family or friends is only advisable if you don't need to ever see the money again. Unless you can write it off in your head, don't do it.