Lending my partner money?

[DAISYBELLAxx]

Hello everyone.

Myself and my partner have lived in his flat for a while, which we put on the market a month ago as we have plans to sell his place and upsize to a house. This is a future move we have both been excited about and discussing for a while.

Unfortunately the property has had little to no interest. I asked in another thread of reasons why this could be and posted the link, and people unanimously said that the lease was too short and that we should arrange to extend the lease before selling.

When we were looking into this yesterday, this may cost him thousands that he doesn't have. I have money saved from when I renovated and sold my last property, I made an 100K profit, which has just sat and earned interest over the three years.

I am in a fortunate position to be able to help him out, so that he can sell and we can then buy our future home.

However, there is that niggle in the back of my mind. I trust him with money as he is very careful, fair and values what he has. On the other hand, I worry about how this will affect our relationship, and I guess the small risk of not getting the money back (god forbid if things were to go wrong) - I've been stung for money with my previous partner which led to a big legal battle, so I am still carrying a bit of trauma from this.

I will not need the money back immediately, as out of the 100K, I had planned to use 50K for a deposit on our future home (he would match my 50K too from the equity in his current property). However, I wanted to use the rest of my money on starting up a new business, so would need the money back in a couple of years time.

He hasn't asked me to lend him the money, but has said that he may not be able to afford to extend the lease and will need to find ways to make/get the money.

It is a pain that this has put a spanner in the works, as a first floor flat (which pretty much looks like a bachelor pad) is not ideal for us as a couple with two dogs (we both had one dog each when we met).

Any advice on this would be amazing. Thank you.

Hi OP,

If your relationship is strong and you're planning to buy a house together, this doesn't sound too worrying to me.

It's sensible to make the loan a formal, written arrangement, so you're covered in case of unexpected situations. He could even return the money to your account in monthly instalments:

Are you worried in other ways?

@FloordrobeIsGoingToGetME I do think it is sensible as it benefits us and our future in the long run. We want to start a family within the next year or so, and living where we do at the moment, this would not work for.

I think all I can hear is my parents voices in the back of my head (they are very overly cautious when it comes to lending money, and I know they will think this is foolish, despite them really liking my partner).

How much are we talking here? Is it an amount that he will get back once he sells?

Eg 20k, so when he sells, he puts in 70k and you put in 30k for your new place, but have a 50/50 share as planned?

Get it all written up, so it's clear and transparent.

Never lend any more than your prepared to lose.

I agree with them.
You never really know anyone. Especially when it comes to money x

I think it might be around 10K I would need to loan, but could be more or less.

Could he give it back when he sells so if his profit is say. 50 he gives you 10 and puts in 40

but also if you aren’t married and your putting in a bigger share / giving up work - going part time to have kids do a deed of trust to reflect your deposit / share

your thread yesterday could mean that even with the new lease it won’t sale for as much as you want but it might sale quicker

you can also start the lease process for the new owners to take on once they move in and yin can reflect this in the price of the sale so this won’t cost you as much money

But I do agree with your parents
what would your boyfriend do if he didn’t have you potentially lending him the money

I think so long as it’s all properly and legally done, you’ve no worries. Having a child with your DP is much more of a commitment than lending him 10k, and you are saying that this is your intention in the not too distant future.

Has he even spoken to a bank about borrowing this amount? Presumably he would only need to borrow it until he sold the house and could therefore pay it off. I wouldn't be jumping in to offer to fund it until he's exhausted all his other options.

I might be stupid but in order to buy your forever home it sounds like the only option, something you need to do to help you both.
you’ve both lived together for a while, what’s the arrangement been? Has he been paying the mortgage while you live there etc? It doesn’t sound like he’s taking advantage or anything as it’s a new home you are getting together
just be prepared to not get the money back. I might be a little naive but why should he have to fund the whole amount long term? If he wasn’t with you, I assume he wouldn’t move? It’s for both of you. Maybe down the line you can split it somehow

How long is the lease?

as long as he has around £2k for legal fees and a survey ( if he goes down the statutory route ) then the premium can be taken out of the sale proceeds on completion and transferred over to the freeholders solicitor.

He is better off trying to negotiate directly with the freeholder and set his own terms, this is quicker than a statutory extension but you and the freeholder both have to agree on the lease terms. A statutory extension is a 90 year bolt on on top of what he already has whilst the informal route and negotiating with the freeholder can be a top up to 99 years, 125 years or anything else in between and above. He won’t have to pay for a surveyor but he will still need to pay for both sets of legal costs.

His agent will adjust the property listing to reflect that a new lease will be granted on completion which will negate the negative impact it is currently having.

For £10k I'd pay it and take it off his part of the equity on the new house.

You want to buy a house with him but don’t think lending him the money to enable him to sell his existing property is a safe bet. I don’t understand why this “loan” is the sticking point when the next financial commitment you seem happy to make is so much bigger & more complex. Are you planning to marry at all? How do you envisage your future joint finances working out when you live together & potentially have children?

Also, you want to start a business in the next 2 years but you are also wanting to start a family. How are you planning to pay the mortgage while doing these things, will you expect your partner to fund it?

What legal protection will you have in place around the equity in the home you buy together? Why not extend this to take account of anything you do lend him now.

I would say that if you using your money to extend the lease is the the best way to ensure you can get the future you want then do it but if you are not sure about this then you need to examine whether you are sure about the rest of the commitment you are planning to make.

You say you’ve been living in his flat for a while. Have you been paying rent? Have you been splitting all costs?
If not, you should consider giving him some money to cover those - you’ve benefited from his home so should pay towards it.

If you HAVE been paying your way, then I agree with PPs who say to get your solicitor to draw up an agreement that says when the flat sells he pays you back out of the proceeds.

Good luck! Am sure the lease extension will make a sale much more likely. x

Say it's 10k, can't he just then put 10k more into your new place to compensate, and you put in 10k less? We sold a flat with a short lease, and we just dropped the price to get it sold, we couldn't be bothered with the hassle of the lease extension and it can also take up to a year if not longer, as you have to wait for the new deeds from the Land Registry.

I would find out first, how much it will cost to extend the lease.

I’m confused as to why you’d be willing to have his children but not lend him money? Regardless on past trauma, you’re agree to start a life and family with this man, if something goes wrong and you have children….the 10k will be the least of your worries. I personally wouldn’t borrow money from my partner if he made me sign a contract.

I think i would reconsider the relationship. Firstly the fact you are worried to loan 10k is a huge red flag in terms of how you view it and trust him and secondly he has no savings, so in terms of finances I think you are not good.

As buying the extension will increase the value of the flat, your partner may be able to get a mortgage to cover it. That may also give you some idea of how much value a lease extension would add. A neighbour of mine did this and it was cost effective – our leases were approaching 80 years.
I once lent money to help a partner with a flat purchase. We had a legal agreement drawn up (he paid for this as he was benefiting) and the loan was lodged as a charge against the property. We agreed a rate of interest between what I'd get from the building society and what he'd pay on a mortgage - this worked well as I got more and he paid out less.
Extending a lease can take time if your freeholder decides to be difficult. Ours decided to object (even though it had no grounds to – our conveyancer said she'd never dealt with freeholders like them) so it took two years (it should normally be a few months to one year). If you want to talk about lease extensions, PM me.

£10K is a large sum but a small part of your money overall.

If you have been together for a long time, and he is financially sound, then I would lend him the money.

Draw up a proper loan agreement though that stipulates that it must be paid back when the flat is sold, or if not sold by XX date, then in instalments of £XX per month.

Take all emotion out of it and make it a business contract. People do screw over other people. Before we married, I cleared XH's credit card and he ran the same debt up all over again.

You can't always trust the ones you love. You do need to be sensible about this.

Has your boyfriend not managed to save anything while you have been living together and sharing costs?

I’d leave him to work it out. Buying a flat with a short lease was his decision. Does he know how much it will cost to extend? Hasn’t he told you the figure?

Maybe you could offer to go halves on it if it really is as high as £10k? I am not sure I would want to risk losing 10% of my savings if he never pays you back. If he has no savings doesn’t sound like he’s good with money?
Are you planning marriage at all?

Have you both thought about how your finances will work if you do have children. Will you have maternity pay at your current job? If you start a business how will you run that? Full time? On the side? Will you start a private pension?

Sounds like you both need to communicate better about finances. I disagree with PP who don’t like contracts. Marriage to a degree is a financial contract and you should have something formal in place if you plan to make a life together without marriage. Including making sure you have wills that protect each other should one of you die. I would find a solicitor and go together to have chat about how to go about all of the financials.

💐

I've friends who have married and made their husbands sign prenuptial agreements, I kept out of it but my actual thinking was why would you marry someone whom you A. Don't trust not to take your inheritance and B. Don't believe in the vows you're going to make "everything I have, I share with you". If you are going to buy together and you love and trust him enough to have a baby with him, I'd say the same. It sounds like the best thing for you to do is sell to access the equity, to build your lives together, if you don't trust him to not take your money why would you want to financially tie yourself to him and start a family? There's always a risk with everything but I really do think that if you're looking for life partnership you need to be sure enough to take small risks. If my DH felt he needed me to sign a legal document to protect his asset's I would not have sold my property and pooled our assets to buy together. Also, when you say it'll cost a few thousand how many thousand are you talking exactly?

I couldn't see myself personally having a child with someone who i wasn't willing to share all my finances with, you will be tied to this man for life with a child. It's a way bigger and more life long impactful decision than lending 10 grand in my opinion.

But we are all different and have different values and things that are important to us.

Could you set up a solid plan and arrangement of how the money will be returned to you? Not a "when you can" thing but a payment plan which you know will be sustainable and affordable for him. If the money he will use to pay you back will get sucked into other things like renovations, holidays or such things then it's probably not a good idea if it's very important for you to feel secure about getting it back.

My feeling is that if you are not comfortable with offering this then you probably aren’t ready to own a house and have children together. Yes protect yourself but relationships are about trust.

If it all falls apart sone years down the line I think 10k will be low on your list of worries

Can he not reduce the flat by the amount it would cost the buyer to increase the lease?