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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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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:

pagwatch · 09/08/2010 15:19

My sister and her DH did this with their best friends. They had known each other 12 years, he was best man at sister and BILs wedding.

They never paid a penny back. Because it was not protected by any kind of a legal agreement they even denied that sis had lent them anything.

Don't ever lend money. The price often includes the relationship.

MerryMarigold · 09/08/2010 15:23

Can they get the mortgage? This happened to friends of mine (made redunant), couldn't get mortgage. If they have to lie to get a mortgage then definitely don't lend it.

minipie · 09/08/2010 15:31

Noooo don't do this.

Haven't read whole thread, sorry if I am repeating but if they tell the bank they have £15,000 of their own savings (which they will have to in order to get a mortgage), when in fact it's a loan from you, they will be committing mortgage fraud. And you will be colluding in this.

Seriously, please don't do this.

tabouleh · 09/08/2010 15:36

pag - that's awful - have your sister and BIL recovered their faith in human nature?

HappyAsASandboy · 09/08/2010 15:47

I don't think this is a good idea, though the change in job security circumstances is not the issue (and I speak as someone who borrowed money from a individual to buy a house then paid them back).

The issue is the borrowing the money to pay you back. The reason they can't take out a loan in advance of the mortgage is that the loan companies will only lend them as much as £15k if it is secured (i.e. they have a reserve on that amount from the sale/reposession of a house). If they had such a tie on their house, they'd get £15k less from their new mortgage company and still need the loan from you.

If you lend them the £15k unsecured (which might mean you never get it back, but that's your choice), they can get the mortgage (and house) and then apply for a loan. The problem is, they'd still only be able to borrow £15k if they can secure it (on the house), but they'll not have sufficient capital in the house to secure the £15k. So more likely than not they'll be turned down and not be able to pay you back.

I think the decision about whether you lend to friends is completely personal, but you need to understand why they can't borrow the money from elsewhere in order to accurately judge whether they'll ever be able to pay you back ....

LIZS · 09/08/2010 15:53

If they try to get a secured loan to pay you back, they'd have to tell the mortgage lender who have first charge over the property and may not get permission if prices have stagnated or gone down. If unsecured, interest rate could well be much higher than standard rate depending on their credit history. Is your loan offer interest-free btw or would you get a return? I hope it works out for you whatever you decide.

thumbwitch · 09/08/2010 15:57

Don't do it. Money causes so much heartache between friends and family, you'll likely lose your friends over it, one way or another.

A friend of mine lent a dear friend of hers (she thought) £10k a few years ago - 'friend' never repaid it. Lesson learnt the hard way.

pagwatch · 09/08/2010 16:04

tabouleh

Yes, it was about ten years ago.
They were so incensed they tried to make a legal case which not only added to their losses but made it worse when they just couldn't prove anything. So they lost their friends and lost any sense of justice.
It was about £20,000 which was all of their savings.

But it was a valuable lesson to them and the rest of us(her family).
Money makes people really weird.

winnybella · 09/08/2010 16:13

I think I'll be a lone voice of dissent and say that if you've got tons of money, then why not?

If that's not the case than don't as indeed you'll have no guarantee that you'll get it back.

I actually was in a situation when I had to ask a friend to lend me money (£ 2,000) to put a deposit down to rent a place to get away from an abusive relationship with DS when he was a newborn. One best friend who has millions refused. Other did lend me the money. I paid her back within a year (that was the agreement).

So it all depends and I for one have lent money to others before- if they were very good friends and they were in need. OTOH here the situation is not so dramatic, worse case your friend will have to wait til she finds a new job and then save for a deposit, I guess.

thumbwitch · 09/08/2010 16:35

Pag, I can't fathom the mindset of people like that - I would feel so bad if I didn't pay the money back! I hate owing people money. An ex of mine robbed me of £4000 - said he'd pay it back, started to but then it fizzled out. I don't know how people can do it to their friends/family etc.

Winny - am somewhat that your richer friend wouldn't help you out - but that is probably why they are richer.

I have lent money to my sister several times and she always pays me back - but I wouldn't go above a certain amount (couldn't anyway) and I would never take out a loan on someone else's behalf.

winnybella · 09/08/2010 17:20

Thumbwitch- she inherited millions. It was ok, I didn't get very upset and she later explained that she felt like people were friends with her because of her money which made her extra paranoid. Anyway, we're still best friends, 10 years later and she's DD's godmother.

mumtoabeautifulbabyboy · 09/08/2010 17:59

Is it just me who feels sorry for this couple?

The way I understand the situation is that YOU decided to OFFER them the money for a deposit (without thinking the situation through at all - it would be daft even without the threat of redundancy if you can't afford to lose it). They didn't ask you for it.

They then proceeded on the understanding that you would do what you have OFFERED. They have now invested time, emotion and money on surveys etc and are at the point of exchange - again all on the proviso that you would do what you offered.

I certainly think that the least you can do is pay for any costs they have incurred. Also emotionally, excpect them to be upset. It is a huge thing to build yourself up to buy a property and move house etc only to hve that dream shattered (basically because you have now thought it through and realised that of course it was a stupid thing to do).

I am not for a moment suggesting that you should give them the money (a ridiculous suggestion without thinking it through) just that IMO they have every right to be annoyed with you.

Heracles · 09/08/2010 18:10

Lend me the money instead. I have a job and I'd be ever so grateful, honest!

EnglandAllenPoe · 09/08/2010 18:12

at worst, you would have paid £15k to never see your friend again!

at best, you'll have helped them to get a house...

BetsyBoop · 09/08/2010 18:13

My Mum always used to say "never lend money to friends as you usually end up with neither" (the money or the said friends)

(she obviously wasn't talking about the odd tenner here )

She also used to say "never lend what you can't afford to lose"

Wise woman my dear old Mum...

Gay40 · 09/08/2010 18:16

Is telling them you aren't lending them the money worse than asking for it back?

Either GIVE them the money or don't, but never loan it out as it just causes arse ache.

Onetoomanycornettos · 09/08/2010 18:27

I agree that you can expect the relationship to be rocky anyway if you pull out now. How are they going to feel being two weeks away from a house, having had a survey, paid all those costs and now not having the money you said you would lend? So, either way, I can't see how this is going to end well. On that basis, don't refuse to lend the money to save the friendship (it won't work, you are letting them down and breaking your word), refuse to lend it if you don't have it yourself and you'd miss it if you never got it back. If you are really wealthy, lend it and trust they will pay you back (or get an agreement drawn up). I've borrowed money from family before and paid back every penny. Not everyone runs away rubbing their hands in glee.

Morloth · 09/08/2010 18:43

We now don't loan money unless we can afford to "give" it. Money is poison to relationships.

The only way I would loan someone that much money would be through a properly signed and witnessed contract.

Morloth · 09/08/2010 18:53

I think you are going to lose the friendship either way, I guess you have to decide whether you are also willing to lose 15k

Duritzfan · 09/08/2010 19:16

I hate to agree but I do ... Have been burned too many times by bailing out friends - have lost two sets because we tried to help them out ..its really sad and until you have been there you just dont really understand how badly wrong it can go .

I ahve a dear friend at the moment who could really use a little help that we could easily afford to give ( well easily compared to her anyway)
Dh and I keep sayingto each other "no - we mustnt help her..we are doing everything we can to get her out of the hole she is in. have taken her to CAB and helping her write letters and all that ... but I wont risk lending her money ..

Money and friendship do not mix ..too many people's emotions are bound up in their financial worth imho and that often causes things to go hugely spectacularly wrong when it comes to repayment time....

I would offer to cover the expenses they have run up so far ( if you can) but if you cant dont worry too much ...So many people are having to retract promises and change plans at the moment due to the financial state of things ..if she's a good friend she will understand ..

Good luck in sorting this out ..its horrible letting people down, but self preservation has to come first ..

winnybella · 09/08/2010 19:29

Yeeeaah...

Duritzfan

How can you call yourself a good friend if you will not help your 'dear friend' who seems to be in a serious need of said help?

I wouldn't want a friend like you and I would be ashamed if it was me behaving like that.

You will not behave like a friend because you don't want to lose the friendship ?.

I have to say that I am a bit surprised at everyone's attitude here- although see my previous post where I agree that you should consider very carefully lending someone £15,000 unless you're a millionaire.

But you Duritzfan? 'A little' help- and you won't give it?

FGS.

RumourOfAHurricane · 09/08/2010 19:42

This reply has been deleted

Message withdrawn

IsItMeOr · 09/08/2010 19:44

Sorry winnybella, but I entirely disagree with your criticism of Duritzfan. It sounds like they are giving a lot of practical help other than actually giving money.

winnybella · 09/08/2010 19:51

What Shineon said.

Indeed, I do not know Duitzfan's friend's situation. And it's great that they are helping her fill out the forms etc so she can get some help.

I do imagine she could do with some help though before she gets any of that money she's applying for? Than, in my opinion, is where friends step in.

IsItMeOr · 09/08/2010 20:07

Hang on though Shineon, the circumstances have changed since the offer was made, namely the friend has been told that she's potentially losing her job.

A bit odd to carry on buying a house in that position, regardless of whether you have a deposit or not.

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