Investment & Investing

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  • And yeah, up to you but I'd never lend substantial sums to someone I'd want to remain friends with in the long run...

  • This week is Good Money Week, there is relevant information on the http://www.goodmoneyweek.com site that may help you.

  • Isn't there an issue here that you'll have an interest in the property.
    ie should your friend default you'd have a claim to the amount lent.

  • It's just an unsecured informal cash loan, the friend can do what they like with it, they just happen to buy a property. They would only have an interest if that was part of the agreement, which would make the idea doubly terrible.

  • But the mortage lender will want to know origin of funds, no?
    As may your solicitor for anti money laundering I'd have thought.

  • But the mortage lender will want to know origin of funds, no?

    It's just "cash savings". You could tell them 'my mate is gonna shout me £30k' which might raise some eyebrows, but as long as no strings are attached to the loan i.e. it's not secured, they won't GAF.

  • It's just "cocaine dealing".

    Fine sir, sign here please.

  • A mortgage broker would be best place to tell you and your friend how to account for the loan.

    As long as you're ok with not having the principle repaid, your mate begrudging you for the loan and avoiding you then there shouldn't be any issues.

  • Note: I'm assuming the friend has most of the money required and they've acquired that through 'non creative' means.

    If they have no money at all, and their recent bank statements don't show a trickle of surplus that could amount to a deposit over time, then yeah, "my mate is shouting me £30k no strings attached' is the correct answer.

  • The mortgage lender/solicitor will want to know more than "it's cash savings" for AML reasons. It won't impact on getting the mortgage but @duncs will have to be prepared to provide documentation to evidence where the money came from.

  • The mortgage lender/solicitor will want to know more than "it's cash savings" for AML reasons.

    I know...see above

    Two different scenarios -

    a. Duncs lends money to 'Steve'. Some time later Steve buys a house using some or all of the money Duncs lent him.

    or

    b. Steve agrees to buy a house, at the point of completion Duncs sends money that he's agreed to lend to Steve.

    (b) will come under greater scrutiny, especially if Steve and his financial history is not well known to the lender.

    I'd imagine, anyway.

    But yeah, the principle - you should be able to explain where the money came from - is obviously a good and correct one, even if explaining it doesn't automatically grant Duncs an interest in the home.

  • a 'gift'

    It needs to be a gift, and not a 'gift'.

    If the conveyancing is done correctly, there will be all sorts of declarations to that end - In particular, that it is not repayable.

    It will count against your IHT threshold limit, if you are unlucky enough to cark it within 7 years - Even of the person pays back the 'gift'.

    The mortgage lender will need to know the source of funds of the gift also, for anti-money laundering checks.

    Both of the above, because it is otherwise a great wheeze for getting dirty money into circulation, or for avoiding various taxes.

  • Ah yeah, I'd forgotten the inheritance tax threshold bit. Not so much of an issue in my case.

    Re mortgage lenders, I know from several cases that they've accepted a verbal confirmation of the gift. This was a long time ago mind.

  • They've got half the deposit, I'd lend the other half. They'd save it (and have been saving it) over the year or two anyway, but I'm happy to see if I can help get the house first and funnel £20k rent into a mortgage in the meantime.
    I definitely do not want or expect an interest in the house (or the stamp duty implications it'd bring when I move shortly)

    Guess there's the potential for the friendship to be impacted, but I'm naive/confident enough to think that wouldn't happen. Guess the next step is to find a conveyancing solicitor or mortgage broker to pose a question to.

  • As long as you're ok with not having the principle repaid, your mate begrudging you for the loan and avoiding you then there shouldn't be any issues.

    ^ this.

    Speaking from experience, although the sum involved was smaller.

  • I think lending money to anyone is a terrible idea and should be avoided at all costs. Then I remebered I lent some one 40% 0f their deposit a couple of years ago, as suggested above I had to sign a declaration provided by their solicitor that it was a gift, wouldn't be repaid etc. and had to be witnessed by a notary which was the most annoying part of the process. It caused no problems but still generally advise against loaning money as its a fast way to change a friendship by introducing a power dynamic that wasn't there previously.

  • This, speaking from experience, multiple times with larger sums.

    Would I do it again? Yes, absolutely, if I can afford it and genuinely can afford to lose it.

  • My punctuation wasn't that clear and it should have been and/or. As in any combination of the 3 is likely to happen.

    Fwiw I do think it's a really nice gesture.

  • I’m a new parent and my son has been gifted £1000 by my grandmother. I’d like to invest it for him, along with future gifts (but not necessarily regular monthly deposits). Where should I be looking? Junior investment isa?

  • Premium bonds? Not the most amazing return but safe and there's a (very small) chance you'll have million win.

  • Ha my first thought was to ‘invest’ in a frame building course and start working on his first ti balance bike

  • Premium Bonds is the obvious and easy option.
    Adding money is easy (£25 minimum), winnings can automatically be reinvested, money is safe as houses.
    The down side is that £1000 in 2040 compared to 2019 isn't going to go as far.

    But then someone wins a million bones every month, why not TrunkieJr.

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Investment & Investing

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