AIBU to object to my husband taking a large loan for a friend?

Never lend what you can't afford to lose.

There's properties come up here sometimes. The photos on Rightmove show half finished rooms cans of paint etc abandoned. The houses go for a song to a developer usually.

He earns high enough to get a loan for a substantial amount of money but has no savings and has debt.? The man is clearly financially irresponsible and should in no way shape or form take out this loan. YANBU to be strongly opposed to this.

In the current housing market and if the project has been on-going for a while I very much doubt there will be much in the way of profit. At the very least they need to get a qualified surveyor’s valuation (or three) to see what the sale might realise?
I’d walk away anyway, in your shoes, but at least you’d have ammunition with the surveyors’ valuations.

No way is this a good idea. This has disaster written all over it.

But to be honest, it sounds like the lot of you are absolutely terrible with money. That none of you actually have any, yet commit yourself to financially draining projects, and borrow money off of each other too much. Why are you all spending money you don't have? It honestly doesn't sound like you and your husband are in a position to loan anyone any money. Would you even get approved for a loan if you're already in debt?

I absolutely would not be allowing this. However. If your DH proceeds, he needs to go down the legal route as an investor in this project, and have all of the T&Cs of the investment set in stone by a lawyer. None of this “back of a fag packet” agreement.

The same thing happened to an acquaintance of mine, she lost over £100K,never saw a penny of it.

I couldn't trust someone I was in a partnership with who did this against my wishes.

All the other creditors will get paid first (including legal fees and expenses if they've taken action to pursue unpaid debt) and your DH will only get what's left, if anything. Absolute madness. His friend is suffering from an acute case of sunken costs, and your DH needs to understand that his qualities as a friend do not depend on ruining his finances as an act of brotherly manliness.

It would be divorce for me.

It seems you, as a couple, lack financial security to begin with (why do you have debts and no savings when you’re both high earners? We’ve always been lower income so maybe I just don’t get it, but I’ve always prioritised financial security as far as we’re able to achieve it; I just can’t imagine having a high income and not ensuring we were financially secure). This alone would drive me a bit mad anyway - I couldn’t stand being worried about money so needlessly when better decision making would surely lead to less worry!

But then this whole loan thing would be an absolute hard no. It’s insane. There is no way I would be willing to be dragged into that and you absolutely will be, even if it’s just in your husband’s name, because if he can’t contribute as much towards bills, mortgage etc because of this loan then it very much becomes your problem.

If he doesn’t respect you enough to listen to your view on this then you need to protect yourself and get out.

Has he never seen an episode of "Grand Designs"?

Building projects generally seem to go over budget and take far longer than expected, ime. And the bigger or more innovative the project is, the worse it seems to get.

Family and friend loans are a nightmare. Voice of experience. £5k I never expect to see again...

Stand your ground.

I got a cold chill of fear through my heart reading the OP and I can well imagine that clamping fear hanging over you every single second of every day that Loan remains outstanding. Especially if you've got your own consumer debt and limited savings, why doesn't DH focus on getting your family onto more solid ground first? (You always put your own life jacket on before helping others).

Money doesn't always bring happiness but jeepers being under financial strain is utterly draining and miserable and brings endless worry, strain and sleepless nights.

I absolutely would not do this unless I was a multi millionaire and could afford to lose the money.

Me too. All large financial decisions should be joint ones. How dare he impact you and your family in this way? It’s utter lunacy to lend when a bank will not.

I would seriously divorce over this

Why can’t the friend sell the unfinished building now? Cut his losses? I have two 40 year plus friendships . I would probably help with an amount that wouldn’t put my whole life at risk if they couldn’t pay back but my mates are more grounded than this friend sounds and wouldn’t get into this situation anyway.

It is a really bad idea, but I can see your DH really feels he can't let his friend, nearly brother down. It sounds like you are going to hate him if he does it and he is going to blame you for his friends bankruptcy if you persuade him not to. Hobson's choice.

But the DH does have a choice. And the friend’s bankruptcy would NEVER be the OP’s fault.

OP, if you gave him an ultimatum, ie he chooses the loan or your marriage, which way do you think it would go?

The friend sounds like an utter loser. It will end badly. AVOID at all costs. What on earth is he thinking??!

A partially built property really has little value, banks won't recognise the potential value when completed. There are some companies that would do a short term bridging loan for a development, but they would require other security like a lien over another property to cover the risk and they tend to charge high interest.

No, he doesn’t do it.

Sounds like it.

Does the snake oil salesman friend work? Or is this project his FT post? Is the loan to cover some of his living costs? Does he have a partner? Maybe others have already bailed him out…

It will be galling to see the friend with a fancy car, house or going on holidays in coming months (if applicable) that could be sold and used to fund the project to completion instead.

The friend is a CF letting your DH do this.

The bank know they wont get their money back if they help him.. why does your DH know better?

And yes as his wife this WILL affect your credit and you could be liable if friends project falls flat anyway.

Id be telling DH we cant afford a second mortgage for your friend.. we dont have it.

And while id be honest and say no, he could always say bank refused. Which it might if he tells them what its for

That's even worse,I read it as your husband gets the loan, and his friend from day one pays the monthly repayments till the term of the loan is done.
So iam I right that,your husband is paying the repayments and when project is sold your husband gets a lump sum. Say your husband borrows 40k, his friend cant just give him 40k back,there will be interest on a 40k loan,it maybe 60k by time it comes to fruition.
This has disaster written all over it,what if the build doesn't sell, with current col crisis people arnt moving,houses arnt selling

You DH is in a difficult position, this is his best friend almost brother about to be bankrupt and possibly lose everything. On the other hand you don't have the cash, but sounds like in the long term you can pay back a loan to cover it. The big problem is will this be the tip of the iceberg you really need to see the project and what still needs doing, will the few 10s of thousands realistically be enough? Building projects are notoriously more expensive than expected, has the friend done this sort of thing successfully before or is this a one off? Has his friend got any source of income so he could pay the loan payments? And just needs the lump sum upfront.

It is a really bad idea, but I can see your DH really feels he can't let his friend, nearly brother down. It sounds like you are going to hate him if he does it and he is going to blame you for his friends bankruptcy if you persuade him not to. Hobson's choice.

A bank won't lend to this friend even though he could put the property up as security. That's huge. It's not just that they think he's a bad credit risk, they don't think there's enough value left in the property after all the debt secured against it is accounted for.

Yet the DH thinks there's going to be enough left over to repay an unsecured debt? He'll never get it back.

So in the meantime youre paying the instalments not the friend with the cash...