Solicitor for large interpersonal loan

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inkpot

Registered User
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Hello

Not sure if this is even a thing, but I would like to know if it is feasible/legal to provide a loan to another individual (family member, 6 figure sum) at a reasonable rate (e.g., 3%, or a typical median mortgage market rate) but which has proper documentation etc. that will satisfy Revenue in all necessary aspects, and if so, are there solicitors who would be experienced in preparing the loan documentation? Concerns would include ensuring full compliance for tax/Revenue purposes, and a solid claim against the loan recipient's estate in the event of their death before the loan is fully settled. Unlike a mortgage, there would be no collateral involved, so there would be additional risk to the lender, but this is accepted.

Thanks in advance!
 
It's certainly legal and feasible. Caution is always advisable when lending money, so a strong written agreement is essential. It should cover all of the following: Lender dies. Can the lender call in the loan early? Borrower dies / gets sick / loses their job. How are disputes resolved?

If the borrower is in good health, it should be possible to start a life insurance policy for the amount and term of the loan (with or without illness cover) and assign the policy to the lender in a similar way to how a Mortgage Protection policy is assigned to a commercial bank. If the borrower is young, this can be a small cost which deals with at least one of the possible events.
 
Dave Vanian said:
It's certainly legal and feasible. Caution is always advisable when lending money, so a strong written agreement is essential. It should cover all of the following: Lender dies. Can the lender call in the loan early? Borrower dies / gets sick / loses their job. How are disputes resolved?

If the borrower is in good health, it should be possible to start a life insurance policy for the amount and term of the loan (with or without illness cover) and assign the policy to the lender in a similar way to how a Mortgage Protection policy is assigned to a commercial bank. If the borrower is young, this can be a small cost which deals with at least one of the possible events.
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Much appreciated, thanks for the guidance.
 
Hello,

Not wanting to be overly negative here, but have you considered what you'll do, if the Borrower defaults?

Will you really take legal action against them?

How far will you go, to recover your money, will you try for a judgement mortgage on their home, for example (if they own a home, that is) ?

Will those actions have an impact on you, or other members of your family, that you can live with?

While often very well intended, I've come to the conclusion that when you "lend" a family member or friend money, you are really giving it to them, and then praying that they'll repay you.

Give serious thought to trying to find another way to help the party in question, maybe joint ownership of an asset, or by going guarantor for a loan from a bank or credit union, for example.
 
MrEarl said:
, will you try for a judgement mortgage on their home, for example (if they own a home, that is) ?
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I'd have thought that a mortgage on their home would be a pretty much essential prerequisite of any six-figure loan deal, even one from a personal lender?
 
T McGibney said:
I'd have thought that a mortgage on their home would be a pretty much essential prerequisite of any six-figure loan deal, even one from a personal lender?
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It certainly would be, if I were the lender - although equity in the property, would be my first choice tbh
 
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