Moneylending

[Simpo Two]

The potential buyer of a house I'm selling is having a little difficulty raising some of the money. I want to get the place sold - is there any sensible way I can lend him some of the money, secured on the property, or do I need to be a licenced credit broker etc? There may be an ordinary mortgage as well; I'd just be acting as a top-up.

[anonymous-user]

That should be fine. Two private citizens are free to enter into loan transactions between them. Just make sure that the terms are clear, and the charge on the house correctly drawn up and registered. Use an insured professional to prepare the documents.

[Simpo Two]

Thank you - I may just drop the solicitor an e-mail and see what he thinks.

[seaninog]

Ummm... wouldn't you need a Consumer Credit License? Category A I think.

I'm not sure. Maybe that's just of you do it as your main business and a one-off transaction between two private citizens is fine. Worth checking though.

[anonymous-user]

If the OP is not in the business of providing credit, he need not be licensed for a one off loan, although the loan itself could still be regulated under the Consumer Credit Act 1974.

[cailean]

Will you have first charge on the property? If he also has a mortgage the bank may have different views.

[Sarnie]

cailean said:

Will you have first charge on the property? If he also has a mortgage the bank may have different views.

The OP has stated that there will be an ordinary mortgage AKA first charge. If the OP gets a second charge secured, the first charge won't care.

[seaninog]

Sarnie said:

The OP has stated that there will be an ordinary mortgage AKA first charge. If the OP gets a second charge secured, the first charge won't care.

Doesn't it depend on the Lender? Some lenders just flat out won't allow a 2nd charge and others won't allow it above a certain LTV

[Sarnie]

seaninog said:

Doesn't it depend on the Lender? Some lenders just flat out won't allow a 2nd charge and others won't allow it above a certain LTV

I'm yet to come across a lender that won't allow a second charge, as long as they remain first charge, I've never had a problem.

[anonymous-user]

you could try using zopa.com or .net (can never remember the address) to do it through there. They have two routes for loans: one generic one (administered by them) or another for 'special cases' where the applicant has to provide details of their situation, etc. If they did that you would be able to sign up as a zopa lender and lend to them...

gives it a good legal basis, you get people to try to recover the debt if necessary, etc.

[sideways sid]

Slightly o/t but do Zopa actually recover unpaid debts?

I may be wrong/out of date but IIRC they just send a letter to the defaulting borrower. Any actual recovery is at the cost and instigation of the lender(s).

Response to OP is as others have said, get your solicitor to draft a simple loan agreement and get the buyer/borrower to agree it. If poss, with legal costs borne by the buyer!

[Simpo Two]

sideways sid said:

Response to OP is as others have said, get your solicitor to draft a simple loan agreement and get the buyer/borrower to agree it. If poss, with legal costs borne by the buyer!

Solicitor said it could be done - cost about £500 + VAT - but thought that really if the buyer is that shaky I'd be better to wait for another one. My biggest concern would be defaulting, and you can be sure that if he has a choice, he will pay the mortgage company before he pays Bank of Simpo. Plus, I'd want it all back in a few years not 25!

[anonymous-user]

I agree: get a better buyer. K I S S, and all that.

[jeff m2]

If I read this correctly, "a house" and not "my house" then a different line of thought can be used.

Lets assume you bought the house for $100k and you are selling it for $150k and the buyer needs 10K.
That would be a worst case scenario of $140k
How do you feel about that? .......Money in the bank, bird in the hand etc etc.

How about selling for 155K and lending 15K !


Lots of people take back loans on investment properties to get the sale through.

[Simpo Two]

I'm selling under POA and every £1 I get will eventually end up with me. Hence whilst it's not my house, I have a vested interest in the proceeds. I don't want to sell the house cheap for a quick sale, but neither do I want it to drag on into 2013 as it will only deteriorate.