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

[Sefal]

My husband has had a friend for some 40 years, it is probably more accurate to describe his friend as being like a brother to him.

His friend has recently got into some financial difficulties due to a building project costing more than expected. His friend has no way of obtaining money to finish the building project, and without money to finish it, the whole project will need to be ‘written off’, essentially throwing tens if not hundreds of thousands of pounds away and facing bankruptcy. My husband then offered to get a loan out for a lot of money (tens of thousands), to give to his friend on the promise his friend pays it back (plus the interest) when the project is completed. His friend has leant him money in the past, but it has always been from his savings never anything like this. It’s also been small amounts - a couple of grand here and there.

I think this is absolutely insane. Me and my husband both earn very well, but we do not have any savings and have loans and debts ourselves. We have also committed to some very high expenses ourselves for the next few years, and my husband in particular has been very anxious about money, which has in turn made me very anxious and I have been trying to find ways to increase our income. This loan would be hundreds of pounds a month, which as I pointed out, why are we worrying about money when my husband can afford an additional hundreds of pounds on a loan?

I also pointed out things such as:

what if your friend can’t pay you back
what if the project costs more
what if you need it paid off and your friend wants more time
what if your friend falls ill
what if you lose your job
what if you fall out with your friend

Essentially pointing out all the reasons why this is nuts. I also told him that if he chooses to do this, I won’t be supporting him nor will I be taking any notice of his fretting about money or wanting to live frugally. I’ve told him if it affects our lives e.g him saying we can’t afford something, I’ll be reminding him of his ridiculous loan. We’ve had a massive argument because of it.

AIBU?

I said to my husband that if we had the savings (and were prepared to never see the money again) then it would be a different conversation.

The reasons we have no savings is because we recently extensively renovated a house ourselves and we have 3 children, 2 are in private school, 1 in nursery, so we have very high expenditure. The debt we have comes from the house renovations, but it is manageable and is being paid back.

It’s a personal loan in the region of £30k that my husband wants to obtain to give loan to his friend.

I have already told him he can forget about me penny pinching or being frugal, given we clearly have much more in the pot than I realised.

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

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

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

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

I’ve told him this but he won’t hear of the possibility that his friend won’t pay him back. He can’t see sense on this at all. I’m hoping if we have another conversation when things are calmer he will be more sensible. Yesterday’s conversation ended in a blazing row.

So is he still adamant he wants to go ahead?

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.

The conversation was left with me basically saying he’s an idiot and I won’t be supporting him with this and he can’t forget me being frugal. But I am hopeful that another conversation that’s calmer and less emotional will reach a clearer and less crazy conclusion.

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.

The friend is loaning from several people according to my husband, and has already maxed out official means of obtaining loans. £30k is tens of thousands to me, and it feels as though this might be the thin end of the wedge.

So the friend is borrowing off a lot of people, this story gets worse and worse. How much is the project costing, how much is the shortfall and how much will the completed project be worth ?

Sounds like a complete disaster. Does the friend have financial and construction experience?

So he owes to not only banks, but other PEOPLE as well? He won’t pay all of you back…

If it was a few grand (similar to what friend has leant husband in the past) I wouldn’t take issue, it’s the amount + it having to be obtained via a loan.

£30k makes even less sense!

There's no way in hell that £30k is the difference been a viable and unviable project. It's just too small a margin!l for it to even be creditable.

If it was accurate, the bank would provide it.
Creditors could also be stretched - not a fan but it's an option.
Negotiations would be reached and late payment with compensation achieved .
The end purchase would provide a prepayment just to get it finished.

If £30k would make that much difference it wouldn't be a problem.

As you husband the following,
Does he know value of the project which has been independently valued?
Has he the full costings, including contigency and paymemt milestones?
Has he PM reports?
Has he a full set of financial accounts, including managememlnt accounts showing a full solvent and liquod position? (He doesn't and there's not liquidity whatsoever)

Your husband might as well burn the £30k now!

He'll never see it again.

He'll be an unsecured creditor in a shitshow!

I would divorce a man this stupid.

He doesn’t know any of this information, but he trusts his friend to pay him back, the loan and repayment would be entirely trust based. It’s lunacy. I’ve already told husband pretty much every scenario that could go wrong with this situation.

The bit I don't get is your stupid husband is paying the loan repayments, why cant said friend pay the repayments, he cant expect your husband to pay the monthly amount and friend just give 30k back when he sells the house,what about the interest.
That friend with or with out loan is going to go bankrupt, he knows full well he will never give it back. Your stupid husband is obvs in ore of this idiot for some reason. The whole thing including your marriage is doomed. How can you know your husband hasn't actually gone and got the loan already?
Plus 30k on a major building project, is a drop in the ocean,it definitely will not seen it finished. It will keep him afloat a month tops

He must get this fully documented if he is stupid enough to do it.

Ask him how he is going to explain to the children if he ends up £30K out of pocket. What will they have to give up on? Family holidays?

The friend doesn’t have the income to pay back the monthly amount until the property is sold.

OP, I suggest putting your opening post into ChatGPT. Ot sums up all the above comments and of course says you are not being unreasonable. Would he listen to an AI reply?

Doesn't that say it all!

He’s heavily emotionally invested, he would not listen to any reason yesterday. I need to broach it again when things are calmer.

The OP says this person is borrowing/wants to borrow from several people, presumably so he doesn't have to ask one person for one truly huge amount.
Which doesn't make it sound like any less of a disaster.

Hi OP. Just wondering if you have a financial advisor that the pair of you could consult in order to try and talk some sense into your DH? Failing that, a different objective friend or relative? He might listen to someone else more readily.

Completely insane. All your points are very valid. You can't ever know what the future holds. Your husband honestly wants to tie himself (and by default you) to a loan, that's not even for his own family, so he can 'lend' his friend money?!!!! There is a very real possibility that his friend never pays him a penny back, and your husband is stuck paying for the loan for years to come.

If you have debts, then how sure are you, that your husband will be able to have the loan....at all or if it's not secured against collateral??!! You definitely don't want any loans taken out that are secured against your home.

As sympathetic I may be to someone having financial issues, and not being able to finish a building project, this isn't your husband's issue to solve. He shouldn't be putting his own financial security in jeopardy to help someone else. That's madness and completely irresponsible.