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?

This tells you all you need to know. If the people whose business it is to make money out of other people needing a cash loan don’t think the friend is a good enough risk even at a huge rate of interest, then why in the world would your husband take on that risk with no security?

If your husband ( and you) can’t afford to gift the money to your friend, which I assume you can’t, then a loan is out of the question.

A good friend will understand that you can’t put yourself at financial jeopardy to save him.

I think you need to reconsider contacting the friend, yes it will be embarrassing but far less embarrassing than ending up in the same situation as he is in, facing insolvency, losing your credit rating. Tell him that he might not realise what your financial situation is, that your husband might have glossed it over in his willingness to help out his friend, but by offering this loan he is putting your families entire financial future at a very real risk and you think he needs to understand that before accepting the help.

I know you think this is all coming out of loyalty or a soft heart - but is there any chance this friend is holding something over your husband?

The lengths your husband is going to, the strangeness of the circumstances, and the heightened emotional reactions when you question any of it, would seriously have me wondering.

Plenty of projects take that situation to banks and get funding to finish. They secure their money through charges on the assets. If no Institute that knows about the cost and returns of tgese projects will touch it then that's the message your husband needs to listen to. When, or if, the project is finished there will be plenty if debts to pay before yoyr husband. And hive completed projects that are still viable don't need to be written off completely. They can be sold on if they are still viable. Money will be lost, but not completely written off.
Highly unlikely you will be seeing the money back if you proceed because this project is in serious trouble and not seen as viable by people who know about these things.

I can understand people saying "divorce him" if he loans his friend the money. Ultimately, the financial fallout of a divorce would dwarf the £30,000 unpaid loan.

The money side of this debacle of a proposal is bad enough. Having popped in again to see if it's been resolved I will say again OP, why are you not considering your DH is basically prioritising this man's wants & desires over common sense & your rejection of the idea.

I would be beyond livid if my DH so much as suggested this & I doubt I'd get over it if he went ahead. Tell him he can support this mans needs all he wants but not financially to the detriment of your own families financial security. 😡

It sounds like he is far too emeshed in this mans needs & life. It's actually a bit sickening considering he has a wife & children. I hope if I pop in again this will be resolved.

Banks don’t give a shit about this they just want something to secure the loan to. And as they are sexist etc too then they don’t consider asking the wife if she is happy with the “man of the house” putting this loan on the house!

I'm beginning to wonder whether your DH is already financially invested in the project rather than just being emotionally invested.

Has he already lent the friend a large sum and is now shitting himself because he is going to lose that amount (£20k, £30k, £50k...?) if the project doesn't complete and make a profit? In other words, is he throwing another £30k into the project in the hope that he gets his initial "investment" back as well as this next £30k? Having seen how you have reacted to his latest proposal, is he going to come clean about any funds that he's already contributed or was he hoping that you'd go along with his latest idiotic idea and hopefully never find out how much risk he's already put you and your family in?

Also when he transfers this money to his friend, surely this will be flagged by the banks and report to HMRC - They will want to know what the money is for, where it has come from and if any taxes due on it, you can't just transfer big amounts anymore (or lots of smaller amounts)

What is the building project- a personal house reno or a business / commercial project? Can your DH have paper work to show an investment in the project so his contribution is recognised and official?
It sounds like the friend owes money left, right and centre - is the project even going to make any money to pay your DH back?

I understand wanting to help a friend, but £30K is more than just a few quid, it's a lot of money. I find the fact your husband is so hell bent on lending his friend this money, quite frankly...odd. Yes, they're old friends, known each other along time, like brother's blah blah blah.

To me, your husband's behaviour strikes me as someone who may be more than emotionally invested, and is in fact already financially invested. He's not listening to reason, he's ignoring every red flag that is flying (and believe me, there are many!) and is willing to sacrifice his own finances to help a friend. None of that is behaviour of a rational person. It stinks of someone who is desperate.

The only other option to explain your husband's batshit behaviour, is that his friend, has some kind of 'hold' over him, and effectively he feels he has no choice but to help financially.

You need to dig into your own finances. Request a credit report for both of you, and see what debts you officially have. Make sure there are no loans secured against your home.

£30k would be unlikely to trigger an investigation, @BrieAndChilli. He may have to hand it over in two payments to make sure, but 10k + 20k on the same day would pass unremarked. Unless the guy's claiming benefits or is already under observation!

Yeah I get that it would be weird, but the friend might not realise the spot he has put you guys in. He may think that your husband has the money spare.

At this point if your husband is refusing to listen, and he is putting your finances at stake, I think I would be saying ‘screw the consequences’ and having the awkward conversation with the friend.

Hope you can make your husband see sense

OP if he isn't listening to you would saying "If you do this, I will divorce you" get his attention?

yes good advice.

The friend knows husband would be taking a loan out and then giving him the loan.

This is a shockingly irresponsible thing to let your friend do for you. There's nothing more to this is there, like your husband 'owing' friend for something you don't know about?

I find this worrying, because he doesn’t care that it is a financial risk to you, and if it comes to being short on payments will he pay your husband or will he pay the bills in his own name to protect his own credit rating.

The bottom line is that if you don’t have £30,000 lying around in a savings account, and you’d have to borrow this, then you can’t afford it. It doesn’t matter what your income is. (And even if you did have £30,000 lying around, I wouldn’t lend to this person - it’s clearly just throwing good money after bad).
I also really wouldn’t trust this friend. They are in a desperate situation as regards money, and desperate people are not always truthful. He won’t care at all that it’s your family’s money. Also, people who get themselves into these kind of fixes can have a bit of a pie-in-the-sky mentality - they delude themselves it will all work out in the end, they just need one more injection of cash and it will all come good. It almost never does.

OP is a joint owner of the house. The banks can be as sexist as they want but they can’t give him a loan secured against the house without OP’s consent.

He’s not a friend. I can’t imagine allowing a friend to do that for me, not in a million. The fact that this guy will accept it speaks volumes about the sort of person he is- deep down selfish, or perhaps blasé about money, champagne tastes on other people’s money? Or is there more to this, is that why your husband isn’t rational about it to talk to? Some deal or scam or problem.

Exactly.

However, I would set up land registry alerts if a charge is attempted against the house, which afaik isnt done automatically. Just in case he decides to commit further fraud.

ETA info on how to set up the alert.

https://www.gov.uk/guidance/property-alert

Which will do what ? It’s not going to guarantee they will get the money back. OP has already said he would have to lie to get the loan in the first place - no bank is going to lend money to give to a friend who has maxed out his credit and who other high street lenders consider too high risk, so DH will have to lie to get the loan. No solicitor is going to sign off on fraud.

We had a long chat this evening and the loan isn’t happening, but we’re going to offer our help where we can. My husband was coming from a place of desperation wanting to help his very good friend x

That sounds like a great outcome, well done for making the conversation happen. Good news for your marriage too