Mortgage between friends?

[Veridicus]

My mortgage is coming up for renewal soon and I have a friend who is willing to step in and take it over which would be advantageous for both of us.

I’m looking for a sample contract to use as a template so we can be clear about our terms and avoid possible misunderstandings. I thought this kind of arrangement was simply referred to as a private mortgage. Is this the right term? I’m not finding anything helpful searching google.

This kind of arrangement can’t be that uncommon. Does anyone out there have any knowledge about this and can point me in the right direction?

 

[Don]

any large contract between friends is tricky. proceed with caution.

 

[Molly Robinson]

still get a lawyer to right it up...and have them register the mortgage on title.

That way your friend feels comfortable and secure and it shows good faith because you would never screw your friend.

I have done many private mortgages and this is the best way to do it.

 

[fuji]

When I bought my first house I borrowed money from family to do it. We still used a lawyer and had it drawn up properly and registered.

I agree with the warning -- family may feel sympathy for you if you get into trouble and cannot make the payments, but friendships you are likely to lose.

 

[LancsLad]

Even if your friend trusts you 100% and you acknowledge that he can slowly and painfully remove your body parts in the event of non performane he will still need the protection of a registered security against your house. If some other creditor comes after you and all the paperwork is not in place he may be getting the short end of the stick.

 

[papasmerf]

Even if your friend trusts you 100% and you acknowledge that he can slowly and painfully remove your body parts in the event of non performane he will still need the protection of a registered security against your house. If some other creditor comes after you and all the paperwork is not in place he may be getting the short end of the stick.

Spoken like a true accountant........


seriously make it a legal contract

I once chartered an accountant..... but he sank off the coast of Florida.

 

[Never Compromised]

Don't do it.

Don't sell used cars to friends, don't borrow money from friends. Simple.

 

[Esco!]

This has disaster written all over it

 

[pokerdude]

In God we trust, all others pay cash

 

[Berlin]

As many others have mentioned ...

... if you value that particular friendship, keep any money out of it. That's what I'd do.

 

[trisket]

Since it's beneficial to both parties it's okay to proceed.
But get a lawyer to write it up.

 

[Veridicus]

Thanks for the advice everyone. Since cutting out the middlemen and taxmen is to our mutual advantage, we’ll likely still proceed. But after all these warnings, cautiously I think. I’ll discuss handling the matter through lawyers with him.

It’s a friendship we’ve had for over twenty years. I don’t think it even occurred to either of us that there was the slightest possibility that anything could come between us. I assume some of you speak from experience and have been burned before.

 

[LordLoki]

.....cutting out the middlemen and taxmen is to our mutual advantage, we’ll likely still proceed.....

Do you often confess criminal intent in font of people? Might want to leave that bit out when talking to lawyers. Also if you default after a few years, and he wants to take any actions to get his money, or write off the loan he has to admit to tax fraud. Cute. Stupid but cute.

 

[LancsLad]

Spoken like a true accountant........


seriously make it a legal contract

I once chartered an accountant..... but he sank off the coast of Florida.

likely headed for a sand bank!!!!!!!!!!!

 

[alex52]

My mortgage is coming up for renewal soon and I have a friend who is willing to step in and take it over which would be advantageous for both of us.

I’m looking for a sample contract to use as a template so we can be clear about our terms and avoid possible misunderstandings. I thought this kind of arrangement was simply referred to as a private mortgage. Is this the right term? I’m not finding anything helpful searching google.

This kind of arrangement can’t be that uncommon. Does anyone out there have any knowledge about this and can point me in the right direction?

Exchange of money between friends is not a good idea. You will loose your friendship.

 

[tboy]

Thanks for the advice everyone. Since cutting out the middlemen and taxmen is to our mutual advantage, we’ll likely still proceed. But after all these warnings, cautiously I think. I’ll discuss handling the matter through lawyers with him.

It’s a friendship we’ve had for over twenty years. I don’t think it even occurred to either of us that there was the slightest possibility that anything could come between us. I assume some of you speak from experience and have been burned before.

I'd like to know how you think you'll cut out the taxman. He still has to declare the interest as investment income and if he doesn't, the government will ask who holds the paper on the house. If he's listed they will ask him why he didn't declare the interest as income.

Yes, he has to be listed as the mortgage holder through the land registry (I think that's where the note is registered) and yes, there is a cost for it. Total legal fees to do a mortgage is around $1200.00.

I don't want to say that this WILL end your friendship, but it most likely will.....remember: this friend will now have something major "over" you.

 

[Terbevore]

Dont -- plain and simple!

This has disaster written all over it

I'm in the mortgage business and have seen many, many disasters and the situation you describe is a train-wreck in slow motion. Do not under any circumstances borrow money from a friend and if you don't heed my advice, at least get the mortgage properly registered.

 

[fuji]

It*s a friendship we*ve had for over twenty years. I don*t think it even occurred to either of us that there was the slightest possibility that anything could come between us. I assume some of you speak from experience and have been burned before.

What happens if for whatever reason you miss a payment?

Could be because you are injured, or you get sued by someone, or just an ordinary bout of Tough Times.

Pretty stressful on a friendship to save a few bucks.

I don't see how the tax man is beat here by the way. Any taxes owing are still owing whether it's your friend or not. Cutting out the middle man will save you what, a percentage?

Not worth it in my opinion.

 

[lickrolaine]

as it has been said here,do not do it,you will loose a friend,and nowadays they are hard to come by!

 

[enduser1]

My mortgage is coming up for renewal soon and I have a friend who is willing to step in and take it over which would be advantageous for both of us.

Kiss your friendship goodbye......