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?

You are married so liable to pay half if it all goes tits up. No way!!

And what if something happens that means you as a family need to get a loan but you can't because he's maxed out and borrowed for his friend?

My DH lent a friend some money (against my wishes I might add!) who was supposed to pay it back the following month.

Guess what reader? Not only did he not pay it back then but he STILL hasn't done so 4 years later.
He's been on several lavish holidays since then and buys himself expensive clothes etc and even better he has asked a few times since to borrow more money! 🙄
DH has asked him for it back and been flannelled off with excuses.
The friendship is over.

That's what will happen to your DH and his friend.
40 years of friendship will end in a bitter fizzle.

Get the loan signed off legally by a solicitor

I never lend money to friends and i never take debt out for friends. I also never borrow money from friends, or let friends buy things then never give them the money back (if for instance a friend bought a ticket for something I'd always transfer the money straight away).

Years ago I was stupid and naive and got a mobile for a friend, they did a runner and never paid a bill. As a naive 21 year old I was left with the mess to clear up.

Ever since I've always gone with money and friends don't mix well. Anyway friends have family they can ask.

This was my first thought. You obviously have big outgoings already and to be honest are not great with money as you ..as a couple..have no savings. As this is a friend of 40 years l am guessing you are not a very young couple so it is strange you have no savings. This leads me to believe that it is absolute madness to take on further pressure. There is one thing practically gauranteed here and that is the end of the friendship. As soon as you loan someone money you begin to watch what they spend . Say they get a new car or go on a holiday you both think: hey where is my money and the whole dynamic changes.
Saying this my dh was doing a building project: investmest thing and his friend offered him a sizeable amount to finish it but it was savings and was paid back in one lump sum on sale but l was not comfortable until that money was returned. And it could have ended badly.
I loaned a friend 1000 once as she was in dire straits and every time we met she apologised she hadn't got it to return and the whole thing became awkward so l just said there is no need to return it and that brought things bavk to normal. But l had savings so it wasn't a pressure but l did say never again not because she didn't pay but because of the change in the friendship..
Do not do it and begin to save a nest egg as it makes life far less pressurised.
Ask for a meeting with an accountant who hopefully your dh will listen to and see sense.
Its likely this building will eat up money and never get finished as building costs are rising rapidly. It's a recipe for disaster.

Is the friend going to pay back interest on the loan?

I made a high risk / high reward type investment two years ago where I loaned £50k to someone to help fund a building project. It was an unsecured loan but we had a loan agreement drawn up by a solicitor, witnessed and signed, and with a clause in that I got 10% interest in a year. The project was finished and the loan plus the interest was repaid to me after 12 months. I then went in again on another of his projects - gave him £55k and he paid me back in a further year plus the interest as promised. Some may have called me mad for doing that. But I had an existing knowledge of the successful type of work this man did, the projects he had finished over the years, and I have known him a long time. I did my research, he openly showed me all of his financial information and I decided that I was ok with that level of risk.

there’s a difference.

The situation you describe sounds that this man is desperate for the money and in a difficult situation with multiple creditors. It sounds like the project isn’t financially viable and that he wants your husband to bail him out, rather than this being a structured project that he and DP would both benefit from.

I would never lend money in a situation where there is the level of pressure, like if he doesn’t get the money the project will collapse. And there needs to be something in it for your husband if he’s taking on that risk. Sounds bonkers and potentially marriage ending.

There is being kind and there is being an idiot.

This falls into the latter category. Lending a mate £2000 is kind. Lending a mate who is on the verge of bankruptcy, who cant borrow from banks because they wont allow him, tens of thousands of pounds when you arent multi millionaires yourselves is utter lunacy and I would bet my mortgage that if he goes ahead with this, he will also lose his friend in time too.

Ive seen this happen too many times not to predict this. The building work will stall, it always does, it always costs more than you think it will, it always takes longer than you think it will and if something goes wrong the money will be swallowed up.
Lending friends money is the fastest way to lose them.

Considering this is such a huge sum and not a small amount, I really think I would be telling him that if he goes ahead with this I would have to consider leaving him. This affects you too, it's not a few hundred quid, it's a significant amount that could have a serious effect on your own finances. The fact he is putting this friend before you and wanging on about saving money whilst considering this would make me implode with rage and I genuinely dont know if I could carry on the relationship.

Absolutely not. All your reasons are valid ones. As another pp said, if it's to be secured against the home, you can veto it.

As an aside, why have you 'committed to some very high expenses ourselves for the next few years' if you're in debt and already tied to some loans? You've also taken loans from this same friend. It sounds like nobody in this scenario is responsible financially. You'd be wise to get yourselves financially solvent with some savings in the bank before committing to more high expenditure.

Even if you do this it wont help you get it back. I know someone who did this, solicitor signed, they didnt pay it back. Took them to small claims court, it was decided in their favour. 4 years later they still dont have the money back

Pursuing someone through the court system is hugely expensive

Yes, I understand this is the case.

This loan will not have a legal impact on OP, but it will strain their finances as a couple and for that reason put their marriage at risk.

In my experience men can be weirdly incautious when it comes to other men and finances. A man who wouldn't dream of spending 10k on a frivolous piece of jewellery for his wife could easily be convinced by "brotherhood" to take a risk like this.

I call it macho sentimentalism - it's about being a provider, and also having some kid of dominance/credo.

My advice is to let the impulse cool a bit and get him thinking everything through. Ok, you want to do "insert ridiculous thing"? Let's check out the finances in detail - and support the dickhead friend to find all the other options available.

As ludicrous as he's being, the safest course is not to fight him, but to help let the fire go out on a drizzle of rain.

No such thing as good friends when it comes to money, at the end of the day your husband would be liable to pay the monthly installment if his friend didn’t and if he has got to this part of the project and maxed out everything I would be loathe to lend him a penny.

Surely your DH isn't thinking his loan might save the project from disaster and make him a profit too? From what you say, it sounds like a money pit and pouring more cash into it is beyond stupid. Maybe he feels obligated to help his friend and it's disloyal to say 'No'. That's too bad. If loyalty to a friend means putting his own family's needs and financial future at risk, 'No' is the only sensible answer.

I don't know much about loans, but could he get something legally drawn up for his friend to sign? I think I would do that, if not, then no loan.

The friend of your dh is no friend, putting your dh in this position.
When and how did he ask? Does he have form for borrowing from friends? Is he married?
It does sound as if your dh is being manipulated by this person and put under pressure. Just because you have a top job and earn loads of money doesnt make you immune to scammers, even if they are long term friends.

Its clever he only approached your dh, who feels under pressure to help a friend. Youve had a row, and now you are the bad guy and telling your dh what to do. Your dh wont listen to anyone, because he thinks he is lending his own money. He is not. You are going to have to support him in this insanity, at which point you say why didnt friend ask us both?

Has this friend sold his house and potless to have to ask your dh for money? I would put everything down on a spreadsheet and say - we cant afford it. In front of friend. The advice above to put an alert on land registry is brilliant.

Say you both need 3 months to think about it. Or a month. Friend will put pressure on to hurry up as its urgent. Have you ever watched ' the following is based on a pack of lies?'

If you are married this loan is half yours anyway. Whoever’s name it is in you would be liable and in any divorce you would take half.

Has the friend 'promised' a cut of the profit to your husband when he sells the property? It's the only way any of this makes sense! Who knows if and when the property will sell in order for your husband to receive even the original loan back. You are definitely not BU. Your husband is not thinking straight.

OP is your husband being coerced to take out this loan? Honestly in years of being on here this is one of the most batshit crazy posts I’ve read!

If you husband is determined to help his friend in this way, makes sure he Instructs a a lawyer to draw up a proper legal charge over the property for value of loan and to record terms and conditions, the charge is properly registered, and he gets professional valuation of the property and completed project, and to confirm that the complete project is projected to make a profit, and the expected completion date.

It seems all you can do is to minimise the risks rather than just opposing it but it going ahead in a more haphazard way despite your objections..

Just to add OP large houses are not selling
Apparently the worst time to sell since 2008.

We put our five bed up for sale eight months ago. Two viewings and one private offer from a family friend. If that hadn't have happened we'd be still trying sell it.

This. In the event it goes ahead, and it needs to to get it completed, you and your DH need to have certain rights. A charge of value against the property in the event the money isn't repaid, the right to instruct a builder of his choice to get it completed and realise the asset etc.

It's a minefield but, dealt with legally, it could be OK. No way would I accept him randomly handing over money with no legal agreement in place.

At least in your case you were being reimbursed each month for the loan payments, however stressful that was. In OP's husband's case, he will be making all the monthly payments and won't be re-paid until this project is finished (which has a very vague timescale) and the building sold. It's obviously been a complete money pit up until now and there is nothing to suggest that it will get any better.

He has "failed" using his own money and loans and is way out of his depth, you have absolutely no guarantee he wont "fail" with your money on top as well.

The banks will probably have a charge on the property already so DH will have no chance of recovering his money when it does finally go belly up, 99.99% chance it will

NOTHING BUT NOTHING IS WORTH THIS RISK - Not even for a friend

Will he make a profit if he's upto his eyeballs in debt? His official creditors will need to be paid off first, and there is no guarantee that they will be. It's based on a hypothetical sale price that may not materialise.

What if he runs out of money again after your husband's injection of cash? Because that seems to have happened already. Maybe more than once.

Why are you in debt if you are high earners? I think he needs to address his own debts before taking on more for a friend. If your husband earns enough to borrow tens of thousands, then why has he not earned enough to pay off his debts, or to not get into debt in the first place? It doesn't really suggest that he makes good financial decisions.

• Has he already asked a lender if he can borrow the money? Surely the lender will ask for the reason for the borrowing and they may not be happy to lend him the money for this reason. If he lies, then that's fraud.

No chance - no