how banks view lending from relative

[eks883]

just wondering for example a relative agreed to lend me money @ x% with X terms. will have a deed stating the conditions.

lets say i want to borrow money from bank in future for further investments, how will banks look at the borrowings from relative, do they treat it as per normal loan?

 

[D.T.]

Is it substantial?
Is there a security/asset attached to that loan?
Is there any proof the loan exists?

 

[Jamie M]

just wondering for example a relative agreed to lend me money @ x% with X terms. will have a deed stating the conditions.

lets say i want to borrow money from bank in future for further investments, how will banks look at the borrowings from relative, do they treat it as per normal loan?

It would be treated the same as any other liability - you declare the limit and monthly repayments. Therefore, it will have an impact on your borrowing capacity.

Cheers

Jamie

 

[Rolf Latham]

might not be relevant to this thread.

Be aware that many lenders will not refinance private loans

ta
rolf

 

[Aaron_C]

If it's a commitment with monthly repayments it's just disclosed as a debt with the corresponding liability for servicing.

 

[Marty McDonald]

If its to assist with a deposit then many lenders want it declared in writing as a non repayable gift. Presumably so as to not affect the ranking of their mortgage in the case of contested equity.

Some lenders are fine with a family loan as long as it is documented and repayments are factored into servicing. This week I had a $30K loan from parents picked up by an assessor on a bank statement. It wasn't a gift per se so I got the parents and borrower to document the loan conditions (no interest and payable in 10 years time or earlier). All I did was then add $250 / month to the commitments ($30K /10 /12).

 

[eks883]

so most important is documentation about payment terms to establish commitments and figures. will it matter if the loan interest is charged lower than what's available in market.

 

[Terry_w]

so most important is documentation about payment terms to establish commitments and figures. will it matter if the loan interest is charged lower than what's available in market.

For servicing it won't matter and they generally won't need evidence.

 

[Marty McDonald]

will it matter if the loan interest is charged lower than what's available in market.

refer earlier post....."no interest and".