Bit of an odd one. Basically a family member has offered to lend me a large amount of money to help progress my build. It'll be an interest free loan which I will repay when I sell the house I'm living in. I would want to protect their money, so I suggested a charge on my house. Anyone done this before or know of any reasons not to do it?

 

Cheers

 

Vijay

2 hours ago, Vijay said:

... Anyone done this before or know of any reasons not to do it? ...

 

Don't. 

Reason : the word '...lend...'  Substitute  '...give...' for lend  , all's well.

Ever taught a loved-one to drive ? Remember that scream of warning you wish you'd managed to suppress  ...........  but couldn't quite and have regretted it ever since?  Thats why.

In more formal terms, lack of professional detachment.

 

lol that's why I would want it all written up properly through a solicitor?

2 hours ago, Vijay said:

I would want to protect their money, so I suggested a charge on my house. Anyone done this before or know of any reasons not to do it?

 

I've done this with my sister; she can't get a mortgage, so she bought the house off me and I basically turned into the mortgage company for her ^^. It's pretty simple, although in our case conveyancing managed to drag it out over a 6-month period somehow. We both had our own set.

 

"For the avoidance of doubt, the loan is interest-free" appears in the charge wording. We both keep records of how much is paid off, and all I have to do is remember to remove the charge once the outstanding amount reaches zero.

 

If we ever had a serious falling out *and* she stopped paying, I'd have to consider whether to just leave the money locked up until she decided to sell, or whether things had gotten bad enough to seek a forced sale, which would be both expensive and morally difficult. In practice, I suspect I'd pick the former. It might be worth having that conversation with your benefactor upfront, and thinking through how you'd handle it from your side.

 

Only you will have a decent read on whether the family member could start misusing the fact of the interest-free loan in ways you'd rather they didn't. Don't discount the possibility, and think that through quite seriously too.

 

But in general, I don't subscribe to the idea that we should keep money out of personal relationships. Sometimes it goes wrong, for sure, but it doesn't have to. 

Edited September 26, 20242 yr by Nick Thomas

Thanks Nick. They are a close family member so I think I will look into it a bit more, maybe we need to have a meeting with a solicitor.

You'll struggle to find one solicitor willing to act for (or even talk to) both of you, I think - conflict of interest.

 

One other thing to keep in mind is that if there's a charge on the house already, or you plan to have one (i.e., take out a mortgage), then you'll struggle to get a second one added.

 

 

I downsized so there's no mortgage and no plan to have one