Sibling asking for a big loan

LegacyUser

My older brother is looking to buy a house but is unable to get a mortgage due his wife being out on maternity leave and having a €20k loan. They can get a mortgage once his wife goes back to work in January (it's a long story but she'll be made permanent on her return). However he can get mortgage on his own name if the €20k loan was paid off.

They asked me if I would be able to give them €20k to pay off the loan. I normally have no problem giving them money but this a massive amount of money.

They said they would try and get the loan out again once they go the mortgage and they could pay me back. I don't know enough about loans to even know if this is possible.

I don't know either how this will effect me if I was to go for a mortgage later in life.

What I don't want to happen is that when I go looking for the money I get told they cannot afford to pay me back as they've got the 2.5 kids, mortgage to pay back etc. I end up being the bad guy for looking my money back.

What should I do? Where should I look for advise on this?

Duvetdays

Never lend more then you can afford to lose is the saying. Personally there's not a hope in hell I'd lend that amount of money all sorts of problems could arise from it. And banks aren't stupid if a 20k loan is suddenly paid off they'll want to know where money came from.

Witcher

He can get a mortgage on his own for a smaller amount without his wife's income...why would he do this, surely he'd wait and borrow more? That's if the bank are willing to entertain him applying on his own and I'm sure they'll question why too. I think he just wants you to payoff his loan and he'll wait until the wife is back working anyway. How have they saved a deposit with 20k being paid off?

Pie in the sky that they'll get a 20k loan out straight after getting a mortgage. I'd say if you give the money there will always be something to stop them paying you back...kids going to school, need some work done on the house, wife needs a new car now she's back to work, mortgage more expensive than they thought, another kid etc.

Only give family or friends money you can afford never to see again.

mailforkev

Don't do it. It has the potential to ruin your relationship with your brother.

Just tell him that you're not in a position to do it at the moment and leave it there, don't get into a discussion. He might be slightly pissed off short term but long term you'll be fine. TBH he knew asking you would put you in a difficult position but did it anyway. It won't hurt them to wait a few months and do it all legit on their own.

bmwguy

I don't think he can apply in his own name only due to being married. As a single man? Yes. They will class her as a dependent and I also think they use the term 'drain' as in she is a drain on his income.
What was the 20k loan for? If it was for a car, sell the car.

ongarite

Never mix friends and money.

If you give the money to your brother have ZERO expectations to ever get it back.

You will resent him and his family any time you see the spending cash on car, holiday, etc thinking why aren't they paying me back that loan instead.

LegacyUser

Strider wrote: »

He can get a mortgage on his own for a smaller amount without his wife's income...why would he do this, surely he'd wait and borrow more? ...... How have they saved a deposit with 20k being paid off?

They want to buy now so that they can get a school / creche for their daughter sorted and where they want to buy they can afford by only getting the mortgage in his name and don't need the bigger mortgage they will get when she goes back to work.

They have saved up something like 30k for the deposit.

LegacyUser

At one point they did owe me 1,500e which I did get back in full it just took a while.

Is there anyone I could talk to professionally about this?

beertons

Never loan to friends or family.

Even this is one to remember. There are no friends in business.

If you can't afford to lose it, keep it.

LegacyUser

Whatever about being asked for a €200 or a €2k loan, €20k???? Is he for real? That's about 6 months of income to most people. You earned it, you keep it. Different story if there was a medical emergency, life or death scenario. Also, they made the decision to have more children- why should you be paying for that decision?
The while thing will only end in tears. Definitely refuse. Be firm but polite

Neyite

There are too many variables for this to be any kind acceptable risk for you.

If they need to take out a loan to settle a loan so that they can take out a mortgage, where will the 20k to pay you back come from?

With kids, there are always things to pay for. I'm guessing that if she's going back in January the baby is newborn or near enough to that age. It was very cheap for us at that point - had all the baby stuff by then, heaps of baby clothes and all that stuff. It's when they get to being a bit older that the costs start. Baby foods, follow on milk, bigger car seat, shoes, clothes, activities. Days out with baby. Bigger toys - eg trampoline /swing /bikes and so on. Kiddie tablets. Santa presents. That's just off the top of my head. Compared to now, what I spent in the maternity leave months was minscule.

Why can't they wait until January when there are two full wages again and go hell for leather paying it off and get a house this time next year?

You know in your heart and soul that if they were anyway decent and sensible with money they wouldn't even come near you for a loan based on those details. You also know you'd have slim chance of ever getting it back unless you can afford to lose it.

I appreciate that it will be very awkward to turn him down and it's unlikely to go down well either. Beware of the flying monkeys who he might send to canvass you and put pressure on you too - maybe a sibling or parent. Just say that actually, you have plans for that money this year so unfortunately you arent in the position to help them, and don't explain or justify further. The more you explain why you need your money the more you'll be nagged about why you can forgo what you want to do with it in favour of them.

Best of luck.

Big Bag of Chips

Have you got €20k? If not will you have to take out a loan, to pay off their loan? And then depend on them paying you back on order for you to pay on back? If they don't pay you back immediately, which they won't, will the pay back the full amount plus the interest?

You can talk to a solicitor who could possibly draw up a legal agreement for you... But... If your brother doesn't pay you back will you put in place whatever is in the agreement? Will you effectively sue your brother for repayment or will you just let it slide?

It's a huge amount of money, and it is a very unfair position to put you in. Nobody could blame you for saying no.

Witcher

2LoanON2Loan wrote: »

They want to buy now so that they can get a school / creche for their daughter sorted and where they want to buy they can afford by only getting the mortgage in his name and don't need the bigger mortgage they will get when she goes back to work.

They have saved up something like 30k for the deposit.

30k deposit so he's looking for 300k of a mortgage on a sole basis? Based on the 10% deposit rule. Must be earning serious money.

Has he said how much of a mortgage he's looking for? If it's less then he can afford to reduce the deposit savings, put it off his loan and just pay any remainder off as normal. If they have to wait then too bad, you'll essentially be paying 20k so they don't have to wait and you'll never see it again.

Story doesn't add up to me for some reason, either they're just looking to stuff you for 20k and pay off their loan or they actually have neither a deposit nor a loan and your 20 is their deposit.

LegacyUser

Strider wrote: »

30k deposit so he's looking for 300k of a mortgage on a sole basis? Based on the 10% deposit rule. Must be earning serious money.

Has he said how much of a mortgage he's looking for? If it's less then he can afford to reduce the deposit savings, put it off his loan and just pay any remainder off as normal. If they have to wait then too bad, you'll essentially be paying 20k so they don't have to wait and you'll never see it again.

Story doesn't add up to me for some reason, either they're just looking to stuff you for 20k and pay off their loan or they actually have neither a deposit nor a loan and your 20 is their deposit.

Cannot quite remember but I think it was around the €180k mark.

I want to help them out but it's just a lot of money. Money caused a lot of friction in my parents family and it's something I'd like to avoid.

Ursus Horribilis

2LoanON2Loan wrote: »

At one point they did owe me 1,500e which I did get back in full it just took a while.

Is there anyone I could talk to professionally about this?

A psychiatrist? A solicitor I suppose.

What exactly are you looking for from this thread? Everyone so far has said a resounding "No" yet you still appear to be willing to go ahead with this regardless. Are you considered to be something of a soft touch in the family I wonder? You loaned them a relatively small sum of money before and eventually they paid it back. In the grand scale of things, €1,500 is a small sum of money and you've got to wonder why couldn't they come up with the money themselves? I don't believe you're fully up to speed with their financial health .

If they were serious about buying a house, why did rack up this €20k debt? That they've not cleared it goes to show that (1) they can't afford to buy the house and (2) they didn't put any thought into cleaning up their finances before applying for the mortgage. I don't know if you've ever applied for a mortgage yourself but the bank looks for a lot of paperwork going back 6-12 months. When I was applying for my mortgage I had to give them 12 months worth of bank statements for the savings account I was accumulating the deposit in. Are they being totally honest with you?

Anyway, back to your very original question. How about simply saying "No". You don't need to justify your refusal to them. Nor should you be allowed to guilt them into making you give them this money. I think they have some cheek coming to you looking for such a large amount of money and I think they are taking you for a ride.

LegacyUser

I would not do this for the following reasons.

a) They already have a loan of €20k but yet they have €30k in savings - why take out a loan when you already have savings?
b) His wife is pregnant and he said she is going back to work in Jan and she will be made permerment then. What happens if the baby arrives early, need extra care when they are born and his wife decides to take 6 months unpaid time from work?
c) He said once they get a mortage they will try to get a loan for €20k. At that stage they will have 1 or 2 children and mortgage payments - the banks are not lending money out that easly.
d) His wife decides to go part time due to the cost of childcare in a year or two?

Put it this way you lend them €20k. In 2 years time they look to borrow €20k from the bank to pay you back and are told no. Another year later they are expecting child no 2 or 3.
Due to this they can't afford to get out a loan of €20k to pay you back.

You gave them €1500 before and it took them time to pay this back to you. This should tell you that if you give them €20k you will be lucky to get it back.

In 5 years time you still have not got your money back. You have saved hard but not having that €20k is limiting the area you can afford to buy in. Also you don't know where you will be in a few years time or if some thing unforseen happens that €20k could help you then.

I would just tell him I am not in a position to give you this money. Let him go to your parents or her family if he wants €20k. To be honest your brother is better off waiting till his wife is back in work and getting his loan paid off before he gets a mortage.

redlad12

2LoanON2Loan wrote: »

At one point they did owe me 1,500e which I did get back in full it just took a while.

Is there anyone I could talk to professionally about this?

I agree with all the posters so far, the only way I'd contemplate it if I was in your scenario, is if I had a lot of money spare and a high salary. Basically in real terms is 20K a serious amount of money to you? If it is which it is for 95% of people then don't lend it. The fact your brother and his wife asked you suggests you are incredibly well off or they're just a bit mental.

The_Conductor

It is a lot of money- and its a nightmare asking family or friends to repay money they borrow.

Is there some manner that you could go as guarantor on his mortgage now- with the prospect of being taken off as guarantor when his wife goes back to work- in order for him to argue for an exception to the normal lending rules?

There are ways you can help him with the mortgage- other than hand over 20k.

Also- what on earth is he doing with a personal loan of 20k when he has a deposit of 30k somewhere else? Personal loans- are- aside from credit card debt and unsanctioned overdrafts- the most expensive way possible for someone to borrow.

If you were to borrow the 20k to give him- you could well be paying 12.5% interest on it........... Yet- he has 30k sitting in an account gathering dust- while he is paying at least 12% on a loan elsewhere- doesn't add up..........

Do not give him the money under any circumstance- but do offer to go as a guarantor on his mortgage on a temporary basis- on the understanding that you are removed as guarantor once his wife is back in work?

If you can't afford to write-off the money- don't give it to him- however, there are other ways to help, other than offering a lumpsum to him..........

Note- as a guarantor- normally you'd register a tertiary claim on the title- until such time as you're taken off. Cost of this lien is about 1,000. Seems like a far more reasonable prospect- and most lenders are reasonably happy to go along with it..........

Hannibal_Smith

If you lend this money you are completely at their mercy. Historically when a family member would lend another family member money they would do up a mortgage between them both. But the bank won't allow this kind of thing nowadays. Furthermore if the bank will more than likely ask where the different between the purchase price and loan amount has come from. And you may be asked to sign a document confirming it's a gift and you have no interest in the property.

If you could agree that it be repaid at x amount for x months it might be workable? But you are completely at their mercy and it is a lot of money.

LegacyUser

Hi op just to let you know that if your brother is married and he is purchasing his family home then no bank will allow him to apply on his own for a mortgage. He will have to make sworn declarations regarding his family status to the bank. Unless he lies about his marital status he won't be able to do what he is trying to do!

OldMrBrennan83

This post has been deleted.

Another day

Bear in mind it is quite common for someone to not return to work after a baby. Financially it is often not viable with cost of childcare. Don't do it unless you have it to spare and are aware you may never see it again.

LegacyUser

2LoanON2Loan wrote: »

They want to buy now so that they can get a school / creche for their daughter sorted and where they want to buy they can afford by only getting the mortgage in his name and don't need the bigger mortgage they will get when she goes back to work.

They have saved up something like 30k for the deposit.

No they've saved 10,000 for their deposit if they owe 20,000 on a loan. You'd be mental to help out!

LegacyUser

They have saved up something like 30k for the deposit.[/quote]

So between the 2 of them they have *only* managed to save €30k, yet they expect you alone to lend them a cool €20k?
Just doing the basic maths, & especially with babies& children now involved, it's going to take them years to pay you back. Money for creche plans? They should have thought of that long before now. Not your problem.
What if you meet the live of your life tomorrow & want to plan a wedding? Or if you see a house you know is your dream home? Or if you become ill & need to take time off work? You need that financial cushion that you've worked so hard for.

whoopsadoodles

The bank will ask where the 20k came from.

You will be asked to write a letter saying you gave it as a gift meaning you will have no comeback in getting the cash returned if it goes tits up.

It will also then be subject to tax.

A couple with a new house and young family will generally be under a lot of financial strain for many years. Paying you €20k back will be their lowest priority.
As others have said, if you are willing to lose the money, then give it. Otherwise tell them you can't afford such a loan.

Teyla Emmagan

No way OP. Tell them you are saving for your own house (or to put on a swimming pool). They can just do what everyone else has to do and not live in their dream location.

beauf

Give a gift. Not a loan. You won't be getting it back. But not 20k. Just no.

Your brother should not be trying to buy a house with a 20k debt and only one person eligible for a mortgage. If anything doesn't go to plan he'll be drowning in debt.

He is trying to buy something when he can't afford it. When we had cleared his loan himself only then should he consider buying a house.

He needs to change his habits. You need to stop giving him money.

LynnGrace

Another absolutely resounding NO for all of the reasons outlined.

I'm assuming that you have the money, what I am wondering is how do they know that you have it...I'm not asking you to answer that. Just making the point that it is none of their beeswax.

Your brother doesn't appear very clued up financially. As others have said, bank statements would quickly reveal how the loan got paid off.

Please just don't do it. It's far too much to ask of anyone, in the first place, to be honest.

Ursus Horribilis

Another way of looking at this is that if you give them the money, you're giving them more rope to hang themselves with. Are they coming to you because clearing the debt from their savings then saving like mad to get back to 30k is not an option? You're doing them a favour by not loaning them the money.

beauf

Panic buying a house is not the time to help him. When someone is sick, or something else dire, you can help out then.

I understand people can feel they have a window to buy a house and it may not open again. But that has to balanced by a realistic appraisal if something is actually affordable.

You can't be 20k in debt buying a house.

Neyite

The other thing you might be guilted into is that they will say that you are the one holding their baby back from getting a school place and so on.

Don't fall for it.

Yes, it's true that depending on the area, schools and creche's are over subscribed. But that is for the parents to work out the logistics of - not you. Bluntly speaking, if it was that critical to have bought a house in a particular area so a child can access a school, then they should have thought about that before getting pregnant. That was the time to get their ducks in a row, pay off loans, save like mad yokes.

They cant hold you responsible for their life choices leaving them in a bit of a muddle - and it's not the end of the world - there are options if they want. Childcare comes in various forms and various prices. They can move to a more affordable area. (we did) they can commute to the school (a friend did for a few years until a place became available in the school they wanted) They can rent in the area. Plenty do.

The world and you do NOT owe them a living. They need to cut their cloth accordingly. Do you know what the personal loan was for? I'm guessing it was their wedding.

You are the soft option for them. And one with no obligation on their part. I think I'd be turning them down citing the fact that it took them long enough to pay you back €1500 so you've no confidence they will be quick to pay you back €20k either.

Riskymove

I understand you want to help but this is a massive ask.

For me , the simple point is that it appears they can just wait until January and get their mortgage without involving you at all.

groovyg

I'm shaking my head at the logic here how can somebody have 30k in savings and 20k in personal debt. Interests on savings are rubbish whereas the charges and interest on personal debt like credit cards are very high. I saw a similar post on another thread where somebody wanted to buy a house had a deposit saved but had loads of silly personal loans outstanding.

Instead of saving 30k they should have been paying off the 20k as quick as possible so they could start saving for a mortgage.
How much of that 20k is made up interest and bank charges? Op your older brother doesn?t sound like somebody who is very good with managing his financial arrangements.
Has he even gone to the bank and asked about getting a mortgage. If he had he would know he can?t apply as a single applicant as he is married, and the fact they have a baby on the way will impact on the amount they wish to borrow.
There are so many red flags with this.

The_Conductor

Honestly- it sounds like he is looking for a present of the 20k- and not a loan.

LegacyUser

OP this is not life and death, they want the money for convenience. It's not going to impact them massively to wait until 2018. He might be a little put out with you for saying no but he'll get over it and should see in a few months how silly an idea it was. It's also highly unlikely he would even get the mortgage as a single person as he is married.

From your posts it doesn't even sound like they've found a house, they just want to move for schools. I could maybe understand the rushed nature if they'd found their dream house (but even then would say to the loan from you) but it just sounds like he/they are rushing for no really good reason.

stuboy01

OP
if you can afford 20K and you really want to help out your brother I could understand giving it to him.
but it really would be giving it to him, don't expect it back ANY time soon.
if it does come back, it will be in drips and drabs.

take it from me, I've been a borrower from family, completely different circumstances and for a fraction of the amount you've outlined, and I was upfront with them. i.e. "I'm struggling here, need help and don't know if I'll ever be able to repay you. that is the basis that I am asking for money from you."

Your brother needs to be realistic and honest with you, he doesn't know if he'll ever be able to repay this. it's a HUGE amount of money.
however, if this is money that you can afford to do without in the medium term, you will have the benefit of knowing that you have helped out your brother and his family get a home - if that floats your boat. But spent money is soon forgotten, so don't expect to be getting plaudits for long.
also, you may some day need his help for something in 10 or 15 years.

on another note...property prices are rising like nobodies business, My friend recently bought a house, asking price 275, they got it for 386. that's a staggering 40% increase in price through bidding. does your brother realise that this is what will be involved in buying a house. he might be looking at houses that are on the market for 180 odd, he can expect to pay 250+ for them. is he prepared for that?
I doubt it. property has gone back to peak boom madness, expect the 20K loan to turn to 25K when he realises he needs a bigger deposit.


on a personal note...I comletely regret borrowing money from family. it didn't spoil relationships or anything, but I just realised a after the whole fact that it wasn't really necessary and I should have just faced the fact that I did not have enough money, and faced that reality.
I think your brother needs to face reality here. this is something he cannot afford. he should not be asking you to pay his way. it may be heat of the moment panic mindset "NEED MONEY, NEED HOUSE ASAP" and he's nto thinking critically.
However, I could understand you giving it, sometimes its just what family members do.

jon1981

Never share your personal finances with your siblings or your parents. Mine don't know if I have 20k or 2k ... I prefer to keep it that way as it prevents these requests coming along.

I presume you told them you have savings of x amount and therefore too late to say you don't have it? Furthermore when they realise it will be cheaper to repay you at x amount per month over y years without interest than getting a loan with interest ... which option do you think they are going to choose? And of course you'll have other siblings or parents weighing in seeing you as unreasonable for not accepting installments "because sure you don't need the money yet"...

I really hate when family make their problem of their own making your problem, of course i believe in helping family when they are down on their luck but this is not one of those situations.

messy messy

IvoryTower

If my brother gave me 20k i could buy a house as well. He should save and pay off his loan like everyone else. They sound very eager to own a house even though they're clearly not ready

lmimmfn

IvoryTower wrote: »

If my brother gave me 20k i could buy a house as well. He should save and pay off his loan like everyone else. They sound very eager to own a house even though they're clearly not ready

I agree with this, they shouldn't be getting a mortgage anyway until they pay off that massive loan.

Like others have said, if you so give a sibling a large sum of money don't ever expect it back. You're better off loaning 1 or 2k, never getting it back but at least you won't be asked for a loan again and its nowhere near as bad as losing 20k

2LoanON2Loan

2LoanON2Loan wrote: »

My older brother is looking to buy a house but is unable to get a mortgage

There are perfectly valid reasons why the bank will not lend to your brother and these are the exact reasons why you should not lend to him.

2LoanON2Loan wrote: »

They have saved up something like 30k for the deposit.

Anonuser17 wrote: »

No they've saved 10,000 for their deposit if they owe 20,000 on a loan

Exactly.

groovyg wrote: »

I'm shaking my head at the logic here how can somebody have 30k in savings and 20k in personal debt. Interests on savings are rubbish whereas the charges and interest on personal debt like credit cards are very high ... your older brother doesn't sound like somebody who is very good with managing his financial arrangements.

I couldn't agree more. Did I understand correctly that they're working on their third child, have a €10k deposit and expect to be able to buy a house?

Unbelievable.

Your brother sounds like he needs a wake-up call and you enabling him by lending him money will do no-one any good.

shafty100

speaking from experience and to make a long story short , my partner strongly against my choice lent one of her family a larger amount 10 years ago and barely 10 percent has been repaid since , and that was after legal threats . i know it will be eventually paid off but the trouble and fall out since was not worth any money so take mine and everybody elses advice and firmly decline

retro:electro

Don't do it op. I've come across people who think loans are other people's problems and can walk away from owing people money without a care in the world. If he can't repay his 20k loan to a bank, what makes you think he will repay you, a family member? You'll end up looking like the bad guy in all of this for daring to ask for your money back. It'll be "oh but baby number 4 is on the way", "x is starting school" "y has her communion". There is nothing whatsoever about his current situation that would fill me with any confidence about his ability to pay money back.

judeboy101

Here's my story. Little sis and hubby TTC no joy good jobs but crazy mortgage. They got loan for 2cycles nojoy . she asked me for 15k to try 3more times as bank/credit union wouldn't touch them at this stage. I gave money (my kids still young didn't need it for their college yet) now I have twin nephew/nice combo and money paid back. Moral of story OP, money comes and money goes but family is forever.

GingerLily

judeboy101 wrote: »

Here's my story. Little sis and hubby TTC no joy good jobs but crazy mortgage. They got loan for 2cycles nojoy . she asked me for 15k to try 3more times as bank/credit union wouldn't touch them at this stage. I gave money (my kids still young didn't need it for their college yet) now I have twin nephew/nice combo and money paid back. Moral of story OP, money comes and money goes but family is forever.

It's not the same though, you didn't lend your sister money so she could borrow more money, you helped her start a family which is time sensitive when TTC, the OPs brother cannot afford the debt and is unlikely to get a mortgage in any case.

jon1981

judeboy101 wrote: »

Moral of story OP, money comes and money goes but family is forever.

Perhaps for some money comes easily but for me and I'm sure many others, not so much and I'm not inclined to let it go so easily either.

OP how easy did the money come for you?

judeboy101

GingerLily wrote: »

It's not the same though, you didn't lend your sister money so she could borrow more money, you helped her start a family which is time sensitive when TTC, the OPs brother cannot afford the debt and is unlikely to get a mortgage in any case.

So to push it to its logical conclusion, OP should not donate kidney to brother as brother cannot afford to buy one in Pakistan.

Ursus Horribilis

The difference between your sister's story and the OP's is that your sister paid the money back. You probably always knew it'd be the case.

Going by what our OP has told us, there's a high risk this money will never be seen again. They took ages to repay a mere €1,500 which is quite a warning sign. I've a feeling the OP is going to seize on your advice anyway. Good luck to them.

Tokyo

Mod:

judeboy101, GingerLily, jon1981 - the back and forth ends here please. Advice towards the OP's issue only, thanks.

Ursus Horribilis

How about the brother does the financially responsible thing? He clears the debt with the €30k that's in his bank account, cuts back on buying unnecessary things and then comes to apply for a mortgage in a year or two without a big debt hanging over him. Oh yeah, and stop getting pregnant when they clearly can't afford it. This screams 2006 and people trying to hoodwink the banks. We know where that got us all. Take a look at your payslip and all that extra tax we all have to pay because of that cursed property bubble and people over extending themselves.

Dial Hard

judeboy101 wrote:

So to push it to its logical conclusion, OP should not donate kidney to brother as brother cannot afford to buy one in Pakistan.

That is laughably false logic.

OP, only you can make the decision at the end of the day. But if it was me, I'd be telling him to pay off the 20k with the money they've saved for the deposit and start saving like the clappers again.