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Original poster

Loaning money to friend

42 replies

Yellowmellow2 · 29/10/2020 13:48

My best friend is buying a house and has a shortfall for a few weeks, whilst she waits for some money she’s inheriting. For one reason or another, she needs to move as soon as possible so I’ve said I’ll loan her the money (several thousand). Just wanted to check if there are any implications from doing this? It would likely to be a loan for 6 to eight weeks.

I’m thinking her solicitor may need confirmation she’s not money laundering?

OP posts:

KylieSmilie · 29/10/2020 16:22

Can she not stay with you for the few weeks she has the shortfall assuming the reason is because she needs to be out of wherever she is living now?

SquishyFishy · 29/10/2020 16:34

Never lend anyone anything that you are not prepared to receive back. If you are happy that the money might not be returned and you think that your friendship can withstand that or it's a friendship that you are happy to lose, no reason not to proceed

WitchesSpelleas · 29/10/2020 17:22

Don't do it - not worth the risk.

If her bank won't lend her the money, there's usually a reason for that.

gamerchick · 29/10/2020 17:27

We'll expect you back in the new year OP when it's taking longer than expected to get paid back.

Look forward to it

Jroseforever · 29/10/2020 17:36

@gamerchick

We'll expect you back in the new year OP when it's taking longer than expected to get paid back.

Look forward to it

In mumsnet world perhaps

Not amongst genuine true old friends such as my group of friends

Hargao · 29/10/2020 17:39

Is she getting a mortgage? They might require it to be a gift not a loan.

cabbageking · 29/10/2020 17:42

The mortgage provider should ask for a letter you are lending X amount as an unsecured loan and that you have no interest in the property. They should require evidence from you where the funding comes from.
I would also put in that letter the process for repayment and any dates you have agreed with your friend. Don't leave repayment opened ended or when you can afford it etc. Give a clear time frame.

SoupDragon · 29/10/2020 18:02

Not amongst genuine true old friends such as my group of friends

Even genuine true old friends can't predict the unexpected.

Justmuddlingalong · 29/10/2020 18:05

You don't know if you can really trust someone until you put that trust to the test.

userxx · 30/10/2020 13:34

If she was a trustworthy close friend then I would.

Jroseforever · 30/10/2020 13:48

@SoupDragon

Not amongst genuine true old friends such as my group of friends

Even genuine true old friends can't predict the unexpected.

It’s not without risk

But one of my really close old friend need mr financial help and I am in a position to do so - I wouldn’t hesitate and didn’t do in the past.

CovidClara · 30/10/2020 15:04

It will need to be a loan and not a gift, particularly because of the tax implications on a gift

There are no tax implications- what made you think that there are?

If you die within 7 years and have a large estate then the estate will owe a small amount of IHT. If you go into a care home in the next few moths and run out of money it may be seen as deprivation of assets.

sneakysnoopysniper · 30/10/2020 15:16

I was involved in an inheritance which took almost 18 months to complete. The solicitors had to search for other possible heirs. Then they had to take out insurance to cover them if heirs they missed popped up later. Inheritances can be very complex things.

TheUpholder · 30/10/2020 15:32

We had to borrow some money from family when we bought a few years ago. It was very much a loan (and was paid back in full earlier than promised), however the family member had to sign to say it was a gift as the mortgage company would not accept a borrowed deposit. That was obviously a big risk for the relative to take, and we were very grateful they did! I would assume you would have to do the same, although it will obviously depend on mortgage provider and circumstances (and whether they need a mortgage in the first place!)

I am all for helping friends out, and while I agree Jroseforever that it doesn’t always end in disaster, I would certainly never lend an amount that I couldn’t afford to lose.

We lent several hundred pounds to a “genuine true old friend” a year ago. They needed it to tide them over for 6 weeks between jobs and were going to pay it back over 3 months. We are yet to see a penny. It hasn’t ended the friendship for 2 reasons - 1) we know they are still struggling, and aren’t taking the piss living the high life, and 2) when we discussed whether or not to lend it we both agreed we wouldn’t be in financial hardship if we didn’t get it back. This friend helped DH out when he needed it, and he still thinks we’ll get it back. I don’t but I’m ok with that.

If you will definitely be relying on getting the money back then don’t do it. If you can get by without it then I’d consider it, but your friend will need to look at the possibility with the mortgage company as it may not be an option anyway.

cingolimama · 30/10/2020 15:43

In Mumsnet world, you should never ever lend or borrow money from friends and family because it always ends badly.

This is not my experience at all. I have borrowed money and lent money many times. It has never been a problem, and has not only made things possible (homes, business ventures, education etc) for me and others, it has made relationships stronger.

M0mmaM0rn1n4 · 30/10/2020 16:52

Surely it would be better to wait until your friend received the inheritance first
Some debts may need to be paid on the estate
She may not know how much the inheritance will be
What happens if you both work & both become unemployed due to the virus
It is not normal times

GrumpyMiddleAgedWoman · 30/10/2020 17:02

I used to be in favour of unofficial loans between people who felt they could trust each other.

We then loaned BIL several thousand. This was years ago, to help establish his business, and a big chunk is still outstanding. It's caused a fair bit of stress and the upshot is that I no longer trust him.

So, only do it if you don't care about the possible consequences.

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