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Should I agree to property loan tied to CPI ?

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  • 04-11-2012 6:13pm
    #1
    webdevdude
    Registered Users Posts: 6 ✭


    In 2008 a friend gave me a loan to buy a property of 78,000. We are trying to come to an agreement to pay back the loan and my friend says the best thing to do is repay it over 20 years with the balance increased in accordance with the CPI (effective from Feb. 2008). Is this a good idea for me? Considering it's a property would I be better off using the Property Price Index instead or even a straight forward interest rate ?

    If I was to pay back a property loan to a friend over 20 years what is best for me ? 3 votes

    Tie it to the CPI
    0%
    Tie it to the PPI
    0%
    Agreed Interest rate?
    0%
    None of the above
    100%
    Pablo SanchezpjmnIslander13 3 votes
    Tagged:


Comments

  • Options
    #2
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    I think it would be fairer to tie it to ECB rate + x%. This would compensate friend for what he would have got in a savings account.


  • Options
    #3
    webdevdude
    Registered Users Posts: 6 ✭webdevdude


    Thanks StillWaters,

    The transaction was more of a goodwill gesture so he's really looking for just his money back taking inflation into account. In this case is the ECB rate still a good option in your opinion ?


  • Options
    #4
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    webdevdude wrote: »
    Thanks StillWaters,

    The transaction was more of a goodwill gesture so he's really looking for just his money back taking inflation into account. In this case is the ECB rate still a good option in your opinion ?

    Yes, I think you should be fair to him. He wouldn't have kept that money under his mattress, you need to compensate him for what he would have earned in an account. You are still getting a very good deal out of it.


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