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

Op, I am a retired Bank Manager, who dealt with recovering debts for a very long time. You asked at the beginning of the thread, whether the Bank could pursue you for the loan, if payments were missed. The short answer is no, because your name won't be on it, BUT - and this is a VERY BIG BUT - should you and your husband separate whilst this loan is still in existence, then it will be counted as marital debt, and in that sense you will become liable for half of it when a separation agreement is drawn up. So, whilst you can't be legally pursued for it by the lender, you would essentially end up paying for half the balance if you split up.

You don't give much info about the project, what's been borrowed already to fund it etc, but secured loans will all be repaid before unsecured loans. Your DH is giving his friend money without the benefit of any security. It's a fools game. If the project has legs, why won't a Bank lend the money? And if Bank's can see it's not worth lending any more, your DH should follow their lead.

From your OP the impression was given of multiples of tens of thousands. I find it hard to believe the friend is on the brink of bankruptcy on a large project worth according to you either

• tens of thousands or
• hundreds of thousands

for the lack of 30K.

This is a very low amount of money. And you mentioned your husband borrowing tens of thousands. It would probably cost around 700£ to service monthly over 5 years.

So is he still adamant he wants to go ahead?

@Sefal Has your DH considered how his feelings towards his old friend will change if the loan is never repaid for whatever reason?

£30 grand?! Wtf? Imagine what you as a family could do with that….

Oh that's a point. Nobody will loan him the money if he's honest, and if he isn't, and defaults...yikes.

Or maybe he should grow a pair and tell his mate he values his marriage?

Oh what a mess. As everyone else says...no. Taking a loan out to bail out a friend is madness, especially such a large one. If you can't afford to lose it, you can't afford to loan it.

Yeah 🤣 oops

@Sefal
Don't let him do it
They may be "brothers"
But he's not yours
You've explained clearly to your husband why it's not a good idea
And if you've a joint account get your own
Plus be mindful of your home, as he'll be thinking remortgage
Tell husband
All monies to his 'brother"come out of his account
Plus still paying his share of debts you both have together
His friend is bad with money, has grand sweeping ideas.
And will never ever pay you back anything like what your husband will give him if at all so will be
Citing they're like family, and he'd have done the same for him
Or
Cold shoulder him completely

If he adds interest it falls under illegal money lending

Also, the organisation making the loan to your DH will want to know what it is for. If your husband is honest "to lend to a friend who is not creditworthy to spend on a failing project" he isn't going to get the loan. If he lies, then that's fraud and deception.
Excellent point.

Think the only sensible way out, so that your husband doesn't lose face, or potentially loses his friend, is to say his application for the loan has been refused.

I don't agree with the point here that this should be a business arrangement, because I don't think your DH should lend the friend this money full stop.
I quoted it though because I do agree that it is very worrying that the project has run out of money with 18 months still to go. That doesn't feel like a good investment to me.
I also agree with the point about your DH being a very high earner but you/he still having no savings. Unless there are particular circumstances that you haven't told us about that explain this, it doesn't sound as if he's great with money. Or you either, for that matter.

Bottom line: the project sounds like a money pit. The friend cannot get a loan elsewhere (from institutions that love to lend money!). Your DH is playing with fire.
It's a big no from me. I wouldn't bother telling him you won’t be supporting him or taking notice of his fretting about money or wanting to live frugally. For me this would be a relationship deal-breaker (and I've been with my DP for 26 years, so I would have a lot to lose).

You are not lending money you already have but taking out a loan for someone else...... don't do it, it's madness! If he goes ahead make sure you get it in writing that you are in no way liable for this loan in any way should things go wrong. TBH if he goes ahead knowing how strongly you feel about it, I would consider divorce.

If the personal loan is refused, have you considered that he might go behind your back and secure this against your JOINT home?

This!

Absolutely agree. I’m talking from personal experience, not from any professional point of view, beyond the legal advice we had when a family member was in a very similar position. We supported her through what was a very traumatic experience and in that instance a significant loan was in her now ex’s sole name and unsecured - mainly because she very wisely refused to consent to the joint marital home being used as collateral. The legal advice was that creditors could only try to recoup their money from assets solely in his name. When they ultimately divorced, the loan was ongoing and judged not to have been used to the benefit of my relative or their family in general, so her ex was ordered to clear the rest of the debt from his own share of the marital assets.

You and your husband are both earning, yet you’ve no savings, have loans and debts?

How would a bank give your husband a loan of hundreds of thousands with no security?

Especially to people with loans and debts. in addition to which your husband is stressed about money and you’re both committed to large expenditure.

You both need to get a grip in your own situation. Before even contemplating the friend’s mess.

If the friends project will not complete for another 18 months, with no guarantee of a sale, or guarantee that the sale will cover the friends debts, your husband would be last on the list of creditors in the event of bankruptcy.

The friend is going down, and will take you and your husband down with him.

OP says DH proposes to get a personal loan so their property wouldn’t be at risk. A loan taken out in the sole name of one partner can’t be secured against jointly owned property without the consent of the other partner, so OP would have to consent to it. In any event if he defaulted, OP would not be liable to repay the loan from her legal entitlement to the division of assets, and she absolutely can protect herself by monitoring the property details on the land registry website and registering for alerts if there are any moves towards taking out finance secured against it without her knowledge.

It would be a deal breaker for me too because it’s reckless, but if the loan was in sole name OP would have no liability.

With all due respect I’d still take proper financial/ legal advice, not on the say so of strangers on the internet! The OP will have no idea of posters qualifications to give financial advice! And when things go pear shaped later she can hardly say well mumsnet told me that I’d be ok 🤷🏻‍♀️