Sibling asking for a big loan

dellas1979

First of all, why are they asking you?

Do you have a mortgage already and a shed load of cash?

Two things here:
1. I am going through mortgage process at the moment. The bank of course will rake over everything. As has been said here a few times, if 20k is paid off all of a sudden, they will want to how. And if its still a loan/an out going for them (i.e., they are paying you back), it will make no difference. What I can see happening, again as said already, is that the bank will ask them to produce a letter (from you) saying that it was gifted. And no interest in the property.

2. How would this affect your future? If you were to go for a mortgage/loan, can you afford to wait....realistically maybe 5-10 years to be paid off? Because how will they get 20k (plus interest-because you'll loose interest) together with mortgage repayments and kids (and everything else that happens in life).

I'm afraid, you will have to think of yourself first. Unless, you have some sort of huge cash available to you and wont need/worry about over 5-10 years.

The_Conductor

The wife has just had one child and is on Mat leave- but due back in work next Jan (or whenever). Who is to say she won't get pregnant again- and decide to stay at home as a stay at home mum- totally torpedo'ing your brother's household income........... I don't think the OP is coming back on this thread- however, the unaminity is deafening (with a few minor outliers)- its not a good idea..........

Toots

Is also be concerned that she might not be made permanent on her return. January is a long way away and a lot could happen between now and then.

rainbowtrout

OP, you are not going to see this money for a very long time, if ever again, if you give it to your brother.

Look at the scenario. He's been rejected for a mortage for 180k - it's not a massive mortgage in the greater scheme of things. As he is married there is no way the bank won't take his wife's earnings into account and situation with baby. He cannot apply by himself, so that would be the first red flag for me.

On top of that, let's assume for a second the reason the bank have said no is because of the 20k loan (presumably for a wedding or car), and have said 'clear then loan then you can have the mortgage, but for now we don't think you can make the repayments on both at the same time'. That is the reality as it stands, as he wants you to clear the loan. Now if he can only manage to pay a mortgage or loan, but not both, what hope do you have of getting your money back if he's gets a mortgage on the strength of you clearing his loan? The first thing that money will go on after mortgage repayments every month is the baby/ supplementing wife's loss of earnings due to maternity leave. The next will be buying stuff for the new house. The next will be creche fees if she returns to work. If the bank don't think he can pay both back at the same time, he sure as hell won't be paying you back any time soon, and as you are not a bank he can fob you off as long as he likes.

Consider how long he took to pay back €1500 to you, and that was without maternity leave, baby and mortgage to consider.

Do not give him the loan. Let him clear his loan with his savings and save up again. They can rent in the area they want to live in for schools if they are that concerned about it, until a time that they can apply for a mortgage and be successful in their application.

The_Honeybadger

Op don't do it. I lent a smaller but still significant sum to a family member a few years ago for what was supposed to be a few months. I got it back 3 years later, and only because they came into an inheritance and couldn't fob me off any more. I was stuck myself at one stage during those three years and really could have used the money.

Your brother probably intends to pay you back, but wait until the time comes and I guarantee you all you will get is excuses and empty promises. It's very hard to push family members when this happens. Again, don't do it!!

Cunning Stunt

I have to say the bit about ''when the wife goes back to work in January'' concerns me also. There are loads of posts here on boards from women who are considering not going back to work after their maternity leave - in this case, if her working is a condition for them being able to pay you back, I would definitely be very cautious about loaning them anything.

If you are feeling bad about refusing then perhaps you could offer them a lower amount like 5k and say thats all you have as either a)you dont have 20k or b) you are saving money yourself for x,y,z... both suggestions that others have given already here.

best of luck anyway

Ghekko

In answer to original post there is no way I would lend that amount to anyone, even family. How does he even know you have it? I wouldn't even make up excuses - a straight out 'no can do' is all you need to say. No explanations or reasons and if he has any cop he shouldn't ask why or be annoyed.

zimszimer1

God, I feel for you. That's a difficult position they've put you in. We never know what's around the next corner so if it was me I'd definitely have to say no. I understand they fully intend to pay you back but what if they can't are you in a position to carry the debt. Best of luck with it, whatever you do!

OP he's given you a very grey story. Lots of ifs and buts. You need to see it in black and white. He is looking for a mortgage for a particular amount. He can't get it from the bank.

His excuses, such as the maternity leave, the loan, the permanency in January, trying to take the loan out again after getting the mortgage, don't factor into the situation. None of those excuses are assets, and none of them will help him with his current situation.

You said you don't know a lot about loans. The banks do, and they wont give him the money. That should tell you enough. It's not just a case of whether or not you'll get that back either, it's actually negligent of you to give it to him. It's going to help him get a mortgage that the bank have advised him he can't afford. He's got a wife and kids, and if you give him that money, you're putting him in a position where he has borrowed much more than he can afford to pay back. This wont only be bad for you (because you will NOT see that money again), but it will also be bad for him and his family because he'll have borrowings far above what he can handle. Once he gets into that situation, and child care costs are rising, and the mortgage repayments are getting too much, he's probably going to get into a vicious cycle of borrowing more and more. When the banks wont give it to him, he'll look to you, and when you finally start saying no, he could turn to moneylenders. These things get out of control very quickly. Right now his debt is manageable - but getting him this mortgage could put him in a much more desperate position.

LegacyUser

Nobody but my father knows about how much money I have (he opened my savings account statement by mistake and that is the only reason he knows) and he would be very unlikely to tell anyone else about that not even my mother. But I've always been know to be diligent with my money so I've often been asked for a loan off family members.

I have a hard time even spending 500€ on a phone so this would have never been anything I would of rushed into.

My brother also earns more money than me so I guess that asks the question why can he not save more money than me.

They went into a broker (and not a bank) and they were the ones who suggested to get a family member to help clear the loan.

I slept on it for a few days and talked it over with my parents and I've decided to go with the overall consensus here by not giving them the money.

Before I had the chance to even say this to my brother he called me up and told me to forget about what he asked as they are going to try and rent in the area they want to buy to see if they like the area.

Thank you all for your advise as I was feeling a bit selfish for thinking of saying no.

valoren

Hi OP,
Do they have any collateral? Cars, valuable items etc?

Your sister in law has the loan for 20k and this is prohibiting their mortgage application in addition to he being on maternity leave.
In effect, you will be clearing off her loan should you give your brother a cheque for 20k.
20k is a significant amount of money.

You need to protect yourself if you are dead set on helping them out.
How about this approach? You tell them that you will help them, you will only give 10k, but you will also require collateral in case they default. They can seek the 10k from others, perhaps her own family?

If they can't provide collateral then you tell them you are not interested.
And if you do make a loan, I would do it officially. Through a solicitor. With terms and conditions for repayment.

They may well condemn you as being an a-hole for covering yourself, with a solicitor, but they are cheeky enough to ask for twenty grand then you tell them it's not your problem, that's how you approach such a situation etc. In a way it is good to see the banks apply strict guidelines and risk assessment for lending.

I've lent money on good will to my younger brother in the past and he tried to burn me. Not a cent was repaid for 3 years. I'm talking thousands. I got repaid but it resulted in a permanent falling out between us. But that is small scale compared to 20k OP.

Ghekko

2LoanON2Loan wrote: »

Nobody but my father knows about how much money I have (he opened my savings account statement by mistake and that is the only reason he knows) and he would be very unlikely to tell anyone else about that not even my mother. But I've always been know to be diligent with my money so I've often been asked for a loan off family members.

I have a hard time even spending 500€ on a phone so this would have never been anything I would of rushed into.

My brother also earns more money than me so I guess that asks the question why can he not save more money than me.

They went into a broker (and not a bank) and they were the ones who suggested to get a family member to help clear the loan.

I slept on it for a few days and talked it over with my parents and I've decided to go with the overall consensus here by not giving them the money.

Before I had the chance to even say this to my brother he called me up and told me to forget about what he asked as they are going to try and rent in the area they want to buy to see if they like the area.

Thank you all for your advise as I was feeling a bit selfish for thinking of saying no.

Big relief for you!

GingerLily

Great news OP, I think we all get stupid ideas sometimes and it's great your brother was able to see the error in judgement before any damage was done!

LynnGrace

Very glad to hear it, OP. Well done you.

retro:electro

Maybe your brother happened to come across this thread! All the best

The_Conductor

Renting in the area to get a feel for the place for a few months- makes perfect sense- its good that he came to that conclusion himself.