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?

Thing is they have no savings and have debts of their own.
The dh is a nutter.

If the debt is entirely in DH’s name, OP can’t be held liable for it. And unless the loan was used to benefit the family as a whole, it would not be considered matrimonial debt in the event of divorce. Courts generally view a loan taken out to bail out a friend as a personal choice, not a marital need, and would almost certainly expect DH clear the debt entirely from his own share of assets, without reducing OP’s entitlement.

Which he won’t be able to get because he will have obtained the loan fraudulently. No bank or loan company is going to lend him the money if he’s truthful about the reason, so he’ll have to lie.

A colleague had an on-off boyfriend... He was cocklodging with her for few months... He was a car crash.

He persuaded her to take out a loan for a motorbike (he'd already crashed several), as he was such a bad credit risk. The amount was more than her gross annual income.

He crashed the bike within a month... He moved our soon after. He kept saying he'd repay... He didn't..

She couldn't afford to repay. After a year he more or less disappeared.

He paid precisely ONE repayment... His rationale? Why should I repay it? ... The motorbike has been scrapped...

She has agressive bailiffs at door (years ago when they still could be...)

She prioritised paying motorbike loan..as It was high interest...

She lost her home having defaulted on mortgage

She had to move back to her parents .. She picked up all the overtime she could to try and keep above water.

She lost her job.... As she could no longer cope with commute from her parents.

All caused by this awful bloke... Who was supposed to be her bestie /boyf..

It took her over a decade to get back where she was

Don't be her!

Obviously this is foolish because it’s an amount of money he will never see again, but it sounds like your DH is just as reckless with money.
So to come at it from a different angle, do you have a proper family budget? Because you say your DH has been fussing about money and how you need to save, yet is now willing to take on a debt with monthly repayments. Do you actually know you can’t afford that as a unit?
I’d be asking him to create a monthly budget to show how he thinks he can fund the monthly repayments. If it shows you can afford it, that implies there’s been some financial abuse going on…and if you can afford it, it becomes about his appetite to write off a sum of money that could have otherwise been your family savings.

Nonsense

Proverbs 22:26-27 NIV
[26] Do not be one who shakes hands in pledge or puts up security for debts; [27] if you lack the means to pay, your very bed will be snatched from under you.

https://bible.com/bible/111/pro.22.26-27.NIV

Proverbs 17:18 NIV
[18] One who has no sense shakes hands in pledge and puts up security for a neighbor.

https://bible.com/bible/111/pro.17.18.NIV

Proverbs 6:1-5 NIV
[1] My son, if you have put up security for your neighbor, if you have shaken hands in pledge for a stranger, [2] you have been trapped by what you said, ensnared by the words of your mouth. [3] So do this, my son, to free yourself, since you have fallen into your neighbor’s hands: Go—to the point of exhaustion— and give your neighbor no rest! [4] Allow no sleep to your eyes, no slumber to your eyelids. [5] Free yourself, like a gazelle from the hand of the hunter, like a bird from the snare of the fowler.

bible.com/bible/111/pro.6.1-5.NIV

Who's asking for it to be signed against the house?

OP this is utterly reckless, and as other posters have said, the friend has so many other creditors that even if the project turned a profit, your DH would have to get in line to get anything back.

You say your DH is confident he can get a personal loan against his high salary. If it’s tens of thousands l doubt that will be the case - it will need to be secured. Most banks cap personal unsecured loans at £25,000-£35,000. And when the lender asks what other debts he has and what the money will be used for what’s he going to tell them ? Because the truth - he already has outstanding debts and the loan is to give to someone who has maxed out their own credit and who high street lenders won’t touch - won’t fly. So, on top of everything else, he will have obtained the loan fraudulently if he lies.

If he goes ahead with this you need to protect yourself. Set up an alert on the land registry website so that if he attempts to secure the loan against your home without your knowledge, you’ll be notified, as well as being alerted to any searches on the property from lenders. I have to say this would be marriage ending for me - putting friendship above the financial security of his family would be a deal breaker.

As a married couple you may have joint and several liability for debts - I’d be concerned if payments are coming out of a joint account, or if the loan is secured against joint property. For your peace of mind I’d speak with a solicitor. Actually if he’s this reckless I’d be speaking to a solicitor anyway about how to protect your personal finances generally. It might also be worth taking along a complete picture of your shared and individual finances to understand what a divorce settlement could be expected to look like - obviously you would be pressing for the loan to come out of his share!

Yet a normal bank is saying no to thd friend.

If DH took out the loan in his sole name he wouldn’t be able to secure it against jointly owned property without OP’s consent. She would have to sign a legal charge. She would have no liability for an unsecured loan in his sole name. In the event of divorce, the courts would more than likely expect DH to pay the loan out of his own share of the assets, since the loan money wasn’t used for the benefit of the family. If l were OP I’d be registering for alerts from the land registry website in case he tries to secure the loan against their property without her knowledge. Land registry would then alert her to any secured loan applications and property searches from lenders.

Which is a huge red flag - they consider him too risky. Even in the event of the project turning a profit, DH would have to get in line with other creditors, and there would be no proof that money had changed hands.

This is my first thought . Both on high salaries yet have debt and no savings so are already over stretched. No way should husband lend his friend any money . I doubt he’ll see a penny back and the friend will be an ex friend .

If DH seems set on helping his friend then he should make a legally binding agreement with friend.

Have the value of the finished project estimated by a real estate agent. Your DH needs to be privy to his friend's loans too.

Only after assessing whether friend can pay back loans with the sale of the project will your DH know whether the loan is fanciful or realistic.

Ask DH to investigate.

If plan stacks up then your DH could offer a loan or ask to be sold a % of the property.

Only agree to DH loaning to his friend if all repayments and servicing costs for loan can be met by your DH without involving any financial help from you.

@hattie43 with bells on.
The dh is a nut.

Just hope for his sake he can’t get the loan. What exactly is he going to say the loan is for because it seems to me he’s going to have to lie. He can hardly say “for a friend as his bank has declined to lend any more” that is fraud. He needs to think twice. I’d be absolutely furious 😡

This may help OP -

https://www.experian.co.uk/consumer/guides/partners-debt.html

A friend whose project has gone tits up and has maxed out all their borrowing power? This is a terrible idea. Think of the worse case scenario and go from there…

Goodbye marriage. This will not end well.

JFC what a terrible idea. If your DH does do this the financial repercussions for you don't bear thinking about as the friend will not be able to pay this loan back. Divorce him OP and try to untangle yourself financially. This plan is insanity.

OP..I feel terrible for you. You must be worried sick.
As you say that you already have loans etc....Are they in joint names or just your dh ?
If your DH takes out this loan .. how is he going make the payments each month ? I presume that you have a mortgage..This should be the priority payment out of the bank. Then any utilities in joint names..
In preparation for the bailiffs coming...which could eventually happen..get everything in the home in your name..TV, furniture etc. Your dh could ,'sell' it to you for 1p. Make a list and both sign it.
Cover your arse OP..
Ever watched " the Bailiffs are Coming " ?

The simple fact here is that if DH has to take out a loan himself to be be able to lend the money, then he can’t afford it. They already have their own debt to service without having to take a leap of faith that the friend will keep up the repayments.

Add to that the fact that the friend has maxed out his credit and high street lenders consider him too much of a risk, what’s DH going to do tell his own lender when they ask what the money will be be used for ? He’ll have to lie, which means the loan has been obtained fraudulently, which rules out any legally binding agreement between them in respect of it.

And there are other creditors. Even if the project turned a profit, DH would have to get behind them and with no proof that money had ever changed hands the chances of getting it back are vanishingly slim. Same goes for DH buying into the project - there are no guarantees that he would recoup any money because he would be a debtor, not a creditor.

I am in the “never lend what you can’t afford to lose” camp.

This would be an absolute dealbreaker for me.

This is totally mental. Definite no from me. But also, if you're both earning well, maybe that £ per month could be directed to savings? Because earning well but having debt not savings sounds very stressful in and of itself. So I wouldn't necessarily be writing off the need to be more frugal.