Lending someone money?
Discussion
If you were in a positon to offer someone, ( a friend of the family ),a loan to finish a building project, would you, and what would you charge.
The amount we are talking of is anywhere between 30-50K, there is no problem with them paying back monthly payments, as his business is doing well, ( but he doesn't want to take a loan out against his business for personal use, and his age is against him for a personal loan ).
Basically what i want to know from experienced people is, how to go about it,( giving me protection ), and what sort of interest do you think I should charge.
The amount we are talking of is anywhere between 30-50K, there is no problem with them paying back monthly payments, as his business is doing well, ( but he doesn't want to take a loan out against his business for personal use, and his age is against him for a personal loan ).
Basically what i want to know from experienced people is, how to go about it,( giving me protection ), and what sort of interest do you think I should charge.
I hear what you are saying, and yes, i have leant money to family members before, although not on this scale, and without anything in writing, and yes, it can get awkward at times.
This would be done totally diferent, in writing, and with some sort of security involved, either, as you say, a charge on the house, or on his business.
What i was after more than anything, was the amount of interest to charge, and repayment amount/period. i know it's up to me in the end what i want to charge, but I am interested in getting your thoughts on the matter, after all the money is no good sitting in the bank, and as long as i can earn a decent return on it without risking it on the open market then I might well consider the loan route.
This would be done totally diferent, in writing, and with some sort of security involved, either, as you say, a charge on the house, or on his business.
What i was after more than anything, was the amount of interest to charge, and repayment amount/period. i know it's up to me in the end what i want to charge, but I am interested in getting your thoughts on the matter, after all the money is no good sitting in the bank, and as long as i can earn a decent return on it without risking it on the open market then I might well consider the loan route.
steve1 said:
If you were in a positon to offer someone, ( a friend of the family ),a loan to finish a building project, would you, and what would you charge.
The amount we are talking of is anywhere between 30-50K, there is no problem with them paying back monthly payments, as his business is doing well, ( but he doesn't want to take a loan out against his business for personal use, and his age is against him for a personal loan ).
Basically what i want to know from experienced people is, how to go about it,( giving me protection ), and what sort of interest do you think I should charge.
No. Not ever, unless you get a charge over the property.The amount we are talking of is anywhere between 30-50K, there is no problem with them paying back monthly payments, as his business is doing well, ( but he doesn't want to take a loan out against his business for personal use, and his age is against him for a personal loan ).
Basically what i want to know from experienced people is, how to go about it,( giving me protection ), and what sort of interest do you think I should charge.
No. 100% no.
You have three options.
1. Treat it with the legal diligence it deserves - solicitor, interest that makes it worth your while and a charge on his property (not his business, as it could fold). I doubt you could do this for less than a High St bank is it still be worth your while. I smell a rat he won't go this route. You say "friend of the family". What happens if he doesn't pay and you make him homeless. How popular will you be with your family?
2. GIVE him on the money, on the understanding that he will repay you, but realistically write it off, never expect to see it again.
3. Don't do it. Avoid the almost certain heartache that will follow.
I've done 1 & 2 and try and only do 3 at all costs these days.
1. Treat it with the legal diligence it deserves - solicitor, interest that makes it worth your while and a charge on his property (not his business, as it could fold). I doubt you could do this for less than a High St bank is it still be worth your while. I smell a rat he won't go this route. You say "friend of the family". What happens if he doesn't pay and you make him homeless. How popular will you be with your family?
2. GIVE him on the money, on the understanding that he will repay you, but realistically write it off, never expect to see it again.
3. Don't do it. Avoid the almost certain heartache that will follow.
I've done 1 & 2 and try and only do 3 at all costs these days.
anonymous said:
[redacted]
Of course I'm listening, that's what these forums are all about, and everyone's entitled to their opinion.I will be talking through the details over the weekend, and if I don't like what I hear then it won't be happening.
But I'm still interested in peoples thoughts, it also gives me more info. when discussions take place.
Davel said:
If you're determined to go down this route, why not match what the bank would charge?
Any less and you're encouraging him to borrow from you.
You could drop by 1% below that if you wish but you must have security.
I was thinking of a lot more than what the banks charge, my way of thinking is, if he wants it that bad then he'll have to pay for it.Any less and you're encouraging him to borrow from you.
You could drop by 1% below that if you wish but you must have security.
I had an uncle lend me a similar sum but over a fixed short term. He took a charge/mortgage against a property and I paid all the legals. There was no interest and I paid him back fully a day early.(9 Months)
I am not the first person he has lent this kind of money to, but he did thank me very much for restoring his faith in humanity. Quite telling I feel.
I must add he really bailed me out and I shall be eternally grateful.
I am not the first person he has lent this kind of money to, but he did thank me very much for restoring his faith in humanity. Quite telling I feel.
I must add he really bailed me out and I shall be eternally grateful.
Edited by Big_Dog on Friday 9th September 23:12
For that amount of money you definitely need to make it a formal agreement with legal advice and taking a charge on his property - I would want a charge on his own home and not on the investment property. Obviously I don't know the nature of your relationship but how do you know his business is doing well, have seen a balance sheet and profit and loss accounts? If he was going to get this money from a bank they'd ask all those questions so you should too. I know lots of people whose businesses have been doing "really well" only for them to mysteriously fold not long after.
You need to think long and hard about this. If it all goes wrong it could cost you all sorts of emotional grief as in effect you could be foreclosing on a friend of the family. If you aren't 100% happy then say no, or probably better to just say that you'd love to help but that you don't have the spare cash at the moment.
You need to think long and hard about this. If it all goes wrong it could cost you all sorts of emotional grief as in effect you could be foreclosing on a friend of the family. If you aren't 100% happy then say no, or probably better to just say that you'd love to help but that you don't have the spare cash at the moment.
To answer a few questions, my brother in law works for him, and has done for quite some time, he is quite high in the food chain so knows the business very well, thus me knowing it's doing ok, the property is his own home, and at the moment he's living on site in a mobile home whilst works are being done, so he is desperate to get it finished and move back in.
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