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?

NO, she doesn't have to say she's sorry

The OP just needs to make sure that they get the full sum back and ideally interest and more.

'just' is doing a lot of work in that sentence!
There are so many possible scenarios in which they do not get the full sum back, let alone interest, let alone any sort of gains.
I don't see any way in which it can be guaranteed, and so I agree with you that saying no would be sensible.

She says the friend has loaned them money before so she probably is sorry she can't return the favour

A couple of grand, not 30K.

So he wants a loan of £30k for his mate, in the opening OP and furthur on I was under the impression it was going to be more like £100k. In the respect OP was being so dramatic about the high figures.
My answer would still be no to a loan.

If the project was viable, someone would lend. He’s throwing good money after bad, your dh will never see a penny of it returned.

Presumably if he, or he and you jointly, have loans and debts such that you cannot save (which is not a criticism) then there's a chance he won't get a loan against his salary. In which case you can say no to one against joint assets. But sadly it will fracture your relationship either way. Either he goes ahead unilaterally, disregarding that you are in a partnership. Or you veto a loan, which his pride will take a hit on. Maybe drive home to him that he would rather damage your marriage, than damage his standing with his friend.

You'll never see that money again. You're husband needs his head seeing to. What if the friend dies? He's obviously under a lot of pressure and stranger things have happened. This building project sounds like a flight of fancy if he's likely to go bankrupt before it's finished and he's also maxed out on borrowing from other people. Hardly a safe bet any way you look at it.

I’m going to talk to husband and see if there is anyway we can offer our help and support that isn’t financial.

To me, £30k is ‘tens of thousands’, and a hell of a lot of money. It’s 1.5 private school fees for the year, for example. It’s not money we have or can afford to give away.

Your husband is banking on his friendship being worth £30,000 plus interest to this friend. It won't be. You can get friends much more easily than that.

If this worked as a business it would.be eligible for loans. Your husband is throwing good money after bad.

In terms of husband feeling he should repay the favour of his friends previous help, I get that, but there’s a big difference between say, £4k, and £30k accruing interest on a personal loan.

I doubt very much the friend will be able to repay so I would not loan the money.

I've always been really cautious with money and when an unsecured loan was mentioned up thread I thought no. But this would be secured against your home! All so he can play generous benefactor and crib about the cost of everything behind closed doors. God no!

If no one else will lend his mate money he's never going to be in a position to pay you back. You could be ruined.

It's the principle as well. He's see his family go without to financially support another grown man.

Lending it if you had it is foolish, taking out a loan to lend it is insane. What if (God forbid), something happened to one of you and he couldn't pay it back?

It would be a personal loan in his name, not secured against our home. Agree it is insane either way though.

This ‘friend’ has borrowed money from your DH before? And now, here he is again, asking for him to lend more money, and a much larger amount?

in all my 60-odd years not one of my friends every asked me for a loan. They never would, and neither would I of them.

I don’t feel that a true ‘thinking’ friend would ask another for a loan of this nature. Surely they’d think, oh, this is too much pressure to put on someone I care about, what if I can’t pay it back or something goes wrong, what if they feel too embarrassed to say no etc …

Your husband if being a wilfully blind fool if he says yes.

Imagine telling your wife she needs to be more frugal so that you can loan £30k to a friend.

AND with other creditors also kicking in money

The friend can't argue the toss with a turned down loan application

The OP just needs to make sure that they get the full sum back and ideally interest and more. If that can't be guaranteed then saying no would be sensible.

No. No. And No again. It will not be ‘guaranteed’. This man cannot go to high street lenders as they consider him too much of a risk to lend to. So that’s why he’s asking OP’s DH. There are other creditors. DH will have to lie to the lender to obtain the loan so it’s fraudulent from the start, which means there will be no record of money changing hands. So even if the project makes a profit, legitimate creditors will come first. There is no guarantee that DH will ever see the money again. This would be bad enough if it was money that he had in the bank but the fact that he has to take out a loan to do it is utter madness. If he hasn’t got it, he can’t afford to lend it.

His bags would be packed and on the driveway.

"Phil only ever lent you money that he had in the bank already, Dave, he NEVER took out a loan to provide money to you. How much money do you actually HAVE that's available? Because a) that's the equivalent scenario so that's the maximum you can give him and b) if you DO have spare cash then why have you been lying to me about our financial position? If we've got more than you told me then we've got family needs to spend it on. I might be open to discussions about lending some of it to Phil but ONLY money that you have now, not a new loan."

OP the reality is that if he defaults it will affect both of you. They can’t take anything in joint name if the loan is in his sole name, but if he has assets in his own name they can come for those. And if the loan repayments are made through your joint bank account, that will link it with the debt and will affect your own credit rating. Are you absolutely sure you trust him not to do anything without your consent ? If he takes out the loan in sole name he can’t secure it against a jointly owned property unless you consent and co-sign. How sure are you that he won’t do this fraudulently ? Please protect yourself. Register with the land registry website for alerts on your property. That way if any lenders do a financial search on the property you will be alerted, and if he tries to take out a secured loan without your knowledge they will alert you to that too.

This ‘friend’ is too much of a risk for high street lenders - he’s maxed out his credit line, so there will be other creditors before your DH, who will have legitimate proof of loan. What will your DH have ? He can’t tell the lender what he wants the money for so he’ll have to lie. It’s fraudulent from the start so there will be no protection. And if the lie is exposed that brings a different world of shit down on your heads.

If this goes ahead this would spell divorce for me.

That's not your decision. If your husband who already is making loan repayments asks the bank for £30.000 they are going to want security. What else can he offer them apart from your home?

If it were me I would already be checking that he hasn't already put your home at risk.