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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To feel worried about lending money?

113 replies

redwiner · 09/08/2010 12:56

I have a very close friend whome I know and trust well, I said I would lend them the money for a deposit to buy a house, as, like many people today they cannot raise the money themselves. However they have just told me that they may be losing their job soon, and whilst they may well get another one straight away-they also may not in the current employment climate.
My dilema is do I go ahead with my promise and lend them the money (about £15,000) and take the chance that if they don't get another job soon I may lose it if they get repossesed, or do I devastate my friend and say I am not going to lend it to them now-knowing full well that without my help they will lose the house and all the fees etc they have already paid out?
I am really having sleepless nights over this. The original plan was that about 6 months after moving in they were going to take out a loan to repay me.

OP posts:
LadyintheRadiator · 09/08/2010 12:59

This reply has been deleted

Message withdrawn at poster's request.

SlobbyBOB · 09/08/2010 13:01

So why cannot they take a loan now for that?
rather than in 6 months time.

Difficult situation, but they should be able to do this for themselves. Circumstances can change, even though you trust them it could be years before you ae repaid in full, say your cirumstances change?.

LIZS · 09/08/2010 13:03

surely if the job is that insecure and finances already so tight they should n't be trying to get a mortgage atm anyway. The lender would expect cirucmstacnes not to change so soon and there would be no help to pay it while unemployed. If you can't afford to lose it , without also losing the friendship the process, don't do it.

tabouleh · 09/08/2010 13:04

YANBU.

Bloody hell - don't do this unless you can afford to loose the money? EG to you have tens of thousands in the bank. What about pension provision etc.

What would your savings be if you did this. Your own savings need to be several months worth of living costs etc plus savings for specific things for you in the future.

Your friend will not get a mortgage unless you confirm that it is a gift. They will look at the bank statements prior to making the offer. Therefore you will have no loan agreement in place.

Also how on earth do you think they will get a loan for £15,000 on top of a mortgage?

It is not enough to trust your friend. If he/she has the money to repay you may be certain that they will repay (or though you cannot be 100% certain). However circumstances may prevail that they cannot repay - eg critical illness/death - unexpected crisis etc.

You were very silly to promise this in the first place.

However you may use the get out clause of saying that now their job is at risk (perhaps also throw in possibility of your job at risk).

What fees will they lose out on? A survey, mortgage fee. That is only a few hundred.

If you feel truely dreadful then offer that amount to them as a loan or even a gift.

stepmumtoone · 09/08/2010 13:04

no dont do it, there are so many ways they could not pay you back ...

EndangeredSpecies · 09/08/2010 13:07

Could you not act as guarantor for them to get a bank loan? You might end up having to pay the whole lot anyway but at least they'd be shouldering the burden in the meantime: after all if they can't realistically pay it back they shouldn't be asking you in the first place.

Chil1234 · 09/08/2010 13:08

YANBU Definitely don't lend them the money unless you can afford to lose £15k. Say your circumstances have changed. If they want the house they will take out the loan that they would have done in 6 months' time. For the future, if you ever should decide to lend money out then draw up the contract in the presence of a solicitor and make sure you include a fair rate of interest.

"The road to hell is paved with good intentions."

proudnsad · 09/08/2010 13:09

DO NOT DO THIS.

Lulumaam · 09/08/2010 13:09

if the job is at risk, then, they should not be taking out the mortgage and then expecting to borrow £15000 on top.. the house won't have increaased in value by that much in a few months surely?

what if they don't get another job?

£15000 is a hell of a lot. there must be a good reason they can't raise it any other way.. i'e bank thinks htey can't pay it back

if tehy are good close friends, they'll surely undersatnd that as their circs have changed, it is too high risk now, if they don'tunderstand, they are not the sort of people to lend £15 000 to

if they lose the house before they've bought it, they've not really lost it have they?

Original poster
redwiner · 09/08/2010 13:11

Its so hard because I told them months ago I would do it and I know it will spoil our friendship for good-more down to my guilt than their blame.
Apparently they couldn't take the loan out first as it would look like they owed too much for the mortgage company to lend them the money for the house.
I have no doubt they are being truthful with me, but I would hate myself if this meant that they would never be able to have a place of their own.
My friend is 40 and recently divorced and has been in a rented flat for some time now-it's not even as if they asked for the money-I offered it months ago when the situation was different as ther job was not at risk.

OP posts:
StudiousSal · 09/08/2010 13:12

OMG don't do it, I know you want to help but that's an awful lot to loose if it all goes wrong. TBH I can't see them getting a mortgage if they have no jobs, and with the job situation at the minute, there is no guarantee they will walk straight into another job.

I wholeheartedly agree with Tab, just say that because of the fact that their job is not secure, you feel it would be very inappropriate to lend the money as it would put both of you in awkward position if it was not paid back. Also that you feel you could not afford to loose this amount.

LIZS · 09/08/2010 13:15

You'll feel worse if they get into arrears and can't pay you back. What's the hurry , prices aren't likely to rise over next year by which time they could perhaps have a new job and have saved towarsd a deposit.

Chil1234 · 09/08/2010 13:15

Friendships and money are really bad bedfellows.

The circumstances have changed since you made the offer. Tell your friend that you are concerned that she will be getting into too much debt at a time when her job is not safe - and that lending her money she may not be able to pay back is not good for either of you. If she's been renting for some time then it won't harm her to rent for a few more months.....

At the end of the day, it is your money and your decisions. But only put up what you can afford to lose.... and get a solicitor to draw up the agreement. Friend can sometimes become very fickle when it comes to paying back.... even if they hang on to their job.

glastocat · 09/08/2010 13:16

You'd be crazy to do this.

SlobbyBOB · 09/08/2010 13:17

"Apparently they couldn't take the loan out first as it would look like they owed too much for the mortgage company to lend them the money for the house. "

Sorry that to me sounds as if they are beyond thier current means.

I really would not do this, but if if have other funds to cover any eventuality and you can afford to kiss the money goodbye then it's up to you. But posting on here suggests that isnt the case.

Original poster
redwiner · 09/08/2010 13:17

Oh God I feel sick as I know you are all right. If even one person had said 'no go ahead, it might all be ok' then I may be feeling a bit better but you can't all be wrong I suppose.
How to do it is the next thing-big deep breath I guess!

OP posts:
EndangeredSpecies · 09/08/2010 13:17

If they can't get a loan (a good thing IMO)then as a good friend you need to tell her she's biting off more than she can chew. Things change and at the moment she's in no position to buy her own home is she. There's more to life than home ownership., (If someone would buy my house I'd be in a rented flat like a shot, I'm absolutely sick of the place).

corlan · 09/08/2010 13:19

Here's a bit of Shakespeare that I wish I had taken more notice of -

"Neither a borrower nor a lender be;
For loan oft loses both itself and friend"

From my own (bitter!) experience,I would say never lend money to someone unless you are prepared to lose it.

Lulumaam · 09/08/2010 13:21

they can't afford the house if you don't lend htem £15 000, which means they cannot afford the house full stop. i doubt you will ever see any of the money again if you lend it.

it's worth sacrificing a friendship to ensure your own security in these circumstances

Flisspaps · 09/08/2010 13:21

Tell your friend that as circumstances are now different that you are not in a position to be able to lend them the money now.

If they are a true friend, they will understand why you are having to say this.

There would be absolutely no guarantee of her getting a £15,000 loan in a few months anyway even if she had made a few months' mortgage payments. Taking out a mortgage when you KNOW your job is not secure is a ridiculously irresponsible thing to do anyway.

AMumInScotland · 09/08/2010 13:23

It's not your responsibility - and by encouraging them to go ahead with buying a house when they can't afford it, you aren't really doing them any favours either. They should take the hit on the lost fees etc, and sort themselves out financially before trying again. If a mortgage company thinks they'd be a bad risk with the loan they'd need for the deposit, even though they'd be able to respossess the house and get the money back, then you should definitely not lend them unsecured money to use for it.

Kathyjelly · 09/08/2010 13:34

Definitely not. If they know their income isn't secure, they shouldn't be taking out a mortgage, never mind borrowing extra money from a friend.

Tell them to SAVE up and then look again when things are more settled.

sanielle · 09/08/2010 13:39

I am sure your friend will appriciate why you shouldn't loan her the money if her job is at stake..

fedupofnamechanging · 09/08/2010 13:40

I would tell my friend that my own job was under threat, so I had to keep hold of my money to pay my own expenses. How much have they paid out in fees? Perhaps if they lose the house because you can no longer lend them money you could help them by giving a little bit of cash to cover fees. You shouldn't have promised this really.

LadyintheRadiator · 09/08/2010 13:43

This reply has been deleted

Message withdrawn at poster's request.