30K Loan from 3 Friends to Buy House

Info_Seeker

Trying to buy a house on cash. I am about 30K short. I have spoken to three of my friends. They are ready to give me 8-12K per person to reach to this 30K. I will return them this loan and they are fine with the timeline.

Is there any restriction on such an arrangement? Will revenue, bank, solicitor have an issue with this?

Charles Babbage

If the loan is interest free then the Revenue will regard this as a benefit based on the deposit interest rate and this benefit would be taxable, this wouldn't be much.

see interest free loan on Revenue.ie

The Revenue might also be interested in how you can to have an extra 30,000, but probably not.

A bank would be interested if they are giving you a loan, since you are borrowing additional funds beyond what they think it is appropriate to give you, they could ask you the source of your contribution.

dennyk

With current deposit rates, the loans would have to be a lot bigger than ~10k for the foregone interest to exceed the annual €3k gift exemption, so even if they are interest-free, there won't be any tax consequences.

Your greatest risk is going to be a huge legal headache should your relationship with your friends break down before the loans are paid off (or break down because of the loans). You might want to consider having a solicitor draw up agreements setting out the terms of the loans and repayments, and waiving any legal interest in the property itself. Having a solid legal agreement in writing will help your case greatly if it ever comes to a legal challenge in the future.

Claw Hammer

https://www.boards.ie/discussion/comment/121142178#Comment_121142178

The friends are most at risk of a breakdown rather than the o/p!

Padre_Pio

https://www.boards.ie/discussion/2058314867/30k-loan-from-3-friends-to-buy-house

I would agree a payment schedule with your friends and stick to it, no matter what. People get weird about money.

chrisd2019

https://www.boards.ie/discussion/2058314867/30k-loan-from-3-friends-to-buy-house

Bank would definitely have an issue, as repaying your friends will have consequences for your ability to repay any bank loan.

Citizen2011

https://www.boards.ie/discussion/comment/121152037#Comment_121152037

Did he not saying he is buying the house as a cash buyer? If so why would the bank have an issue?

chrisd2019

https://www.boards.ie/discussion/comment/121152062#Comment_121152062

Bank is mentioned in the original question, certainly a bank would query the arrival of 30K into an account.

JCN12

Go look up Dave Ramsay on YouTube. That would be my advice.

iwillhtfu

Never borrow from friends or family. It may seem like a great idea on paper but you never know what's around the corner, anyone of them could be forced to call in the repayment sooner.

It's just not worth it imo, go speak with your credit union see what they can do.

frank730

if these are loans then the bank would expect your monthly ability to repay to be reduced on the mortgage repayment as you will also be paying 3 separate loans on top of your regular commitments. which means the amount you can borrow will also be reduced, the only way for bank not to worry is if these are gift money.

MakersMark

Perfect way to lose 3 friends