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?

If your husband's salary is high (not sure what qualifies as "high") why does he have debt and no savings?

In relation to the friend and your position you are absolutely not being unreasonable and I don't think your DH should be doing it without your agreement. It can affect both of you. If unpaid, creditors can take action against his assets including the equity in your home. Telling him you won't listen to him complaining about the money or requesting to live more frugally doesn't really cut it. He's wrong to do this without your agreement and it's a bad idea generally to not only loan someone a large amount of money but to lend money you don't have is insane.

Your DH needs to tell him he'd love to be able to help but you have no savings because of your own works and you simply don't have the cash. Tell him he can use you as an excuse maybe that you won't agree to the loan even in his name?

has the friend shown your husband the figures?
list of people he has borrowed from, the amounts, the total amount he owes, what the realistic profit will be etc
so he can show that he can actually pay everyone back what they are owed?
will he put in writing that he owes your husband this money and how it will be paid back and what will happen if for any reason he can't finish the project?

I would hit the bloody roof if my husband did this

This would be an absolute no for me and your husband should respect your views on this.
You and husband are not responsible for someone else’s finances. Friend or not.
This could just all go so horribly wrong for you both.

Some years ago, my brother was considering setting up his own business, and was seeing what investment he could get from various sources. I was one of the people he asked. I told him that I would lend him 5k on the basis of being my brother who I loved, as that's what I could afford to lose if it went tits up. If he wanted more than that, I needed to see his formal business plans, and we needed to draw up formal agreements. And that was for an actual brother.

I just cannot imagine paying the monthly payment for several years, on what is effectively someone else’s loan, with no guarantee that they would ever take over these payments, or indeed ever pay me back. I couldn’t imagine ever walking into that setup.

We’re jointly on the deeds and mortgage, so I don’t think he can just get a loan secured against the house.

I’m not sure that would stack up in court, as others have pointed out it would be fraudulent as he’d be getting the loan under false pretences and then bank transferring it to the friend.

Your husband probably doesn’t know how to reverse this as he’s already told his friend, he would do this. He could say that the bank wouldn’t approve the loan due to his debt and affordability checks. That would be enough to satisfy his friend and at least your husband gets to save face.

OP truthfully how much do you trust him ? No high street lender is going to give him a £30k unsecured loan if he tells them it’s for a friend who’s already up to his eyeballs in debt, has maxed out his credit and can’t get a loan himself because the high street banks consider him too much of a risk. He will have to lie - that’s fraud.

It’s very possible that an unsecured loan of that size won’t be approved anyway, so given that he’s prepared to put the financial future of his family at risk to help this friend, how much of a leap is it to him committing mortgage fraud and trying to secure a loan against the house without your knowledge ?

You know that this is madness. If he has to take out a loan to lend the money he can’t afford to lend it. It’s as simple as that. If he’s determined to go ahead, at the very least you should protect yourself by registering for alerts from the land registry website so that if he tries to take out a second mortgage, you will be alerted, and you’ll get alerts if lenders are carrying out financial searches on the property. This kind of thing is marriage ending - I know from experience. You need to be prepared and protected.

It wouldn’t. There is no protection - it’s fraud.

its easy. I am really sorry old friend but this won't be possible. Rinse and repeat

I think it's the other way -the friend has loaned her partner money in the past. "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."

Other way around. "His friend has loaned 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."

Sorry, @2O26, my mistake. Thank you for setting the record straight. But the rest of my post still stands.

Don't do it. We lent money to my husband's very close friend (they also refer to each other as brothers). We then lent him some more against my will because apparently we were absolutely getting our money back in just a couple of months. Years later he's finally started to pay us back but still owes us a large amount of money (this was from our savings), I don't really really to the friend any more and my husband is also done with him but keeps in touch because he wants our money back. My husband was soooo sure this wouldn't happen because they were like brothers and he would pay back quickly, but here we are.

Yes, he will need to lie, this hadn’t occurred to me in the heat of the moment yesterday but you are correct it will need to be obtained deceptively.

you say a loan of tens of thousands of pounds. I think the bank will want the loan secured against an asset.

But it would still impact on your joint finances. Presumably your bank (or whoever lent you the money for your own home improvements) already knows your financial situation and is not going to be too keen on lending your husband another £30k if you are currently maxed out. A £30k loan is going to require monthly repayments of around £600, so if you are already cutting back, being frugal and generally watching the pennies in order to make ends meet, where is the £600 a month coming from?

Will one child have to leave private education? Will someone need to reduce their hours in order to provide childcare? What about holidays, sports clubs, or the existing repayments?

He can get a loan on the house without them even telling you! Happened to me several times 🙄

Sweet Jesus is your husband an idiot? Just so I'm clear, your DH is planning on:

1. taking out an unsecured loan for £30k
2. handing the cash to his friend whose project planning is that shit that not only does he need to borrow £30k from your DH but other funds from multiple other people AT THE SAME TIME
3. said friend is already indebted up to his eyeballs so he cannot get lending through regular commercial means
4. there will be nothing left of friend's property over which your DH could secure friends obligation to repay him in the (likely) event of default
5. more than likely he won't go through a lawyer to have a loan agreement drawn up so he has something to use on in the event of default

This is not a sensible commercial decision which ever way you look at it. Is there actually any money in your joint budget to make the monthly repayments without affecting your standard of living? If the answer is no, DH cannot grant the loan.

Has DH thought about how this will be funded if one or both of you are made redundant or take ill. Again, get him to run the figures against the backdrop of those scenarios.

For the love of God do not let him secure that loan over your property or extend your mortgage.

Given friends planning to date, I bet he hasn't figured in CGT to the eventual sale so unlikely there will even be any equity left to repay unsecured loans when (if) the project sells.

I'm afraid that if DH wanted to sacrifice the family finances for this madness, this would be a deal breaker for me.

Good luck OP - I think you are going to need it!

Also if your mortgage is up for renewal within the loan term, you won't be able to remortgage with that level of indebtedness so even if everything else works numbers wise, it will still detrimentally affect the family finances

When you say the £30k is 1.5 times the school fees, do you mean you pay £20,000 per child, or £20,000 for the two children to attend private school? Just curious, as I live in Canada, so it's rare for children here to attend private school.

OP - do you know if your husband has actually approached his bank about this loan yet? In reality, the bank will want a list of income and assets before agreeing to lend (that’s pretty standard), and may well want security. If they ask for security and your husband can’t give it (e.g. because you won’t agree to security against your own home), that kind of solves the problem - he can’t lend the money to his friend.
Although ideally he should just come to his senses and realise how stupid a plan this is.
(And really the focus should be to shore up your own position as a couple, if you don’t have any savings to fall back on).

So how is he planning to pay the bank the monthly payments until it’s all ‘paid back’?