Lending money to family member

I'm going to start by saying I know nothing about finance, but I am trying to learn.

My sister has just bought a house and has asked to borrow 120k from me (I have about 200k resting in a high interest bank account). I have no kids or debt, so am able to lend her the money. She and her husband have high paying jobs and have assured me that they can repay me within the year (with 2% interest on the loan).

My sister told me that she has 300k in EFTs, which she can sell to pay the deposit, but would prefer that I lend her the money. This has made me suspicious that perhaps she is trying to take advantage of my generosity by offering me a rate that is lower than what I would make either investing in a high interest account or in shares (I'm thinking about investing myself). My family are pressuring me to lend her the money as she has two young children to support. I want to help but I also think it should be reasonable.

Comments

  • +2

    Dude , she's richer than you. Where's the logic? go adopt two kids on world vision and tell your parents you also have two kids to look after.

  • +1

    How does she know you have that much money in cash?

    I can understand her request if you have discussed your financial positions, and you told her you are keen to just keep all your wealth in cash untill you spend it, or buy houses etc.

    It's cheeky to ask for such a sum of coin whilst holding 300k ETF's, but they probably are really set on building wealth, and dipping into their ETF's seems terrible, when they make so mich coin and are just in a short cash poor spot. Which is an understandable mindset.

    They will probably be salty if you tell them you aren't willing to loan them the cash at 2%.

    Personally I would say somerhing like "I'm looking at opportunities at the moment, and so theres a decent chance I will be investing it in something in the next few months. So I can't loan you it sorry."

    Take a cordial glance at some ETF's if you wish be not lieing.

    • +1

      Yeah I have previously been property shopping with my sister, she has an mba so is far more knowledgable about finances than me. I guess I never thought I would be in this position.

      • Man, what’s your obsession with her having an MBA? It’s totally irrelevant. I’d also very much doubt if they’ve got high flying corporate gigs, they’d be earning 200k, unless she’s a shit lawyer.

  • +2

    Your sister and mother aren't necessarily bad people, but it's a fair assumption. Here are the simple facts:
    1) She will definitely benefit from this arrangement (she pays you a very tiny tiny interest)
    2) You will definitely lose from this arrangement (you lose liquidity for no extra gain)

    Now, has she tried to educate you on financial independence and you've actively decided against it? If you answer yes to that, feel free to help your sister out and she's not necessarily a bad person by asking you to help her. However, the answer is probably no and I highly recommend you invest in yourself and teach yourself financial literacy so that you help YOURSELF invest in your future, instead of helping your sister and handicapping yourself.

  • She and her partner have a high paying job and have another way to procure the money. So there is no need for you to do this, and they won't miss out. It is inappropriate of her to even ask under the circumstances frankly. It should be a no anyway. But that cements it.

  • -1

    Troll post has Achieved its purpose. Should close this thread

  • +2

    Update. Today I spoke to my mother and she started screaming about how I had cost my sister so much money, she was furious because I had originally said I would do it ( I didn't know it was a bad deal for me when I said that). Since then Russia has invaded Ukraine and the value of my sister's stock has apparently dropped. Her selling now means she is going to lose money. Apparently if I wasn't going to do it i should have said so two weeks ago when I was first asked.

    My mother is the one really pushing this. I'm worried that she may not talk to me again if I don't do it. She has even offered me an extra 9k out of her own pocket to sweeten the deal and has promised to take out the 120k from her superannuation if for some reason my sister doesn't repay in 6 months. I feel pretty conflicted and pressured. She thinks I am being unreasonable asking for a contract or to speak to a financial advisor first.

    I really don't want to lose my family. My father is no longer alive and all I have is my mother and sister. I'm in my mid-30s and don't have a partner or family of my own.

    • +12

      'Her selling now means she is going to lose money.'

      Mate, her selling in the future could be an even bigger loss. The women in your family sound like manipulative guilt dumpers and they think your below them. She's going to give you 9k, so you pass 120k onto her daughter? lmao ok.

      Who are you kidding bro. You don't want advice, you want a pity-party. You've received an overwhelming line of support both here and in Whirlpool on what to do, and what definitely not to do. Yet you lack the ability to take action and draw the line in the sand.

      If what I'm telling you doesn't wake you up or put a fire in the bellow nothing will.

      +1 for people to stop replying to this thread now and let it archive since OP has taken zero advice from the people.

      • +7

        Yeah I'm not looking for more advice. I just thought it was fair to at least post an update as some people had asked.

        • I can’t believe how many people are saying you’re a troll. It’s clearly not the case and thanks for replying.

          The reality is however that if she doesn’t want to sell her ETFs right now it’s because she thinks they’ll increase in value over the next year more than the 2% she proposes to pay you. I’d say that’s pretty likely.

          So she sees you as a way to make more money than she otherwise would for herself if she sold her ETFs instead.

          Your money in the bank is rock solid 100% guaranteed. Sure you’re getting a low interest rate on it but it’s 100% secure. Lending to your sister is definitely not rock solid like a bank account. Her circumstances might change, either of them might lose their jobs, house prices might drop preventing them refinancing to pay you out or any of a number of other things. And thats ruling out what others have said about her just deciding not to pay you back (which I agree is very unlikely).

          At the end of the day if she believes that ETFs are a good investment for her $300k she should be offering to teach you how to invest your $200k and get the same returns not trying to take your money cheaply at 2% with greater risk and keeping the good returns for her portfolio.

          You’re just being used. Just say a 10% return is fair considering the market opportunity you’ll be missing out on. It a very reasonable rate if she truely needs the money and isn’t just looking to help her own investment returns at the cost of you.

          PS: you have no responsibility for any recent market volatility due to Ukraine, that’s the whole point of the stock market. Ask her when she initially invested, if it was any time before October she’s probably still 10’s of thousands of dollars in profit regardless of her paper losses in recent weeks. That’s how share trading works and it was her decision to have her money in a higher risk higher reward option than your secure low reward bank account.

        • Help sister, but I think your sister should give you the same compensation as much as what she loses if she sell her ETF. Have this in writing.

    • +2

      and has promised to take out the 120k from her superannuation if for some reason my sister doesn't repay in 6 months.

      Your mother can do right now so there is no need to involve you.

      You are being scammed. Just say no to loans.

      • +3

        It's hard to believe they are scamming me. I come from a close middle-class family. We are not like this…

        But I guess money can change people.

        • +6

          It’s not a scam as such. Just being used. She thinks her ETFs will earn her more than 2% so better to take your money instead of selling them. She should be offering to help you invest your money in ETFs where you can share in these greater earnings instead of using you for a cheap loan.

          • @stirlo: This is a very silly assertion.

            Many people, like OP, dont want to invest and want to keep their money in an asset they understand - cash.

            With what you are saying, why would a bank ever lend money when they can buy ETF's? There are loans specifically for this purpose, the most common is a margin loan. A margin loan attracts a higher rate of interest due to increased risk.

            • +1

              @bman20: Did you read your reply before posting it?

              OP is being asked to provide an unsecured personal loan with a 2% interest rate while the Sister stays invested in high growth, high risk ETFs.

              Essentially he's being asked to provide a 2% margin loan to her so she can invest in ETFs (rather than selling them to pay for the house).

              It's a terrible deal for him. If he wants to help her then she should be paying a far higher rate I suggested 10% or if he's unsure how to invest "I know nothing about finance" then she could teach him how to invest in ETFs and he could get the benefits instead of her.

              Nothing wrong with keeping cash, but offering an unsecured cash loan at below inflation interest rates backed by the recipients riskier ETF investments is disasterous.

              • @stirlo: high risk, high growth etfs - based on what? It could be bond market etfs for all you know.

                The only advice i have provided to OP is that they should not dismiss this request from their family and that if they feel their sister can repay the money, they should charge an interest rate of at least 4% which is more in line with a margin loan.

                • +1

                  @bman20: Compared to an ADI protected bank account every other investment is high risk high return. Besides she wouldn’t be doing it unless she expected to be better than 2% off…

        • +6

          You are being manipulated by both of them. Your mum is probably being manipulated by your sister

          • Your mum says that her money is tied up in her super so she can't pay it, then how is she able to access it in 6 months time? The answer is she won't, and she will say the money is tied up
          • your sister will give you 2% interest, which if compounded monthly is $3650. She has ETFs, and is expecting an annual return of closer to 10%, so $12000. Your sister wants your money so she can pocket the difference of $8500. If your sister wasn't being selfish, she would offer the rate she is getting in her ETF. You should try to explain this to your mum if you think she'll listen.
          • I'm sorry to hear about your dad, I'm guessing he may have had a moderating influence on your mum. Be prepared for them to use your dad and his death against you.
          • assuming your sister has held the ETFs for >12 months, she's made plenty of profit, and is blaming you for her not selling at the top of market. Selling at the peak is impossible. VAS close of market price two weeks ago was about 93.50, it's now at 90.33, so about 3.5% lower. You changing your mind has cost her about $4000, not all that much. Perhaps offer to cover this cost as a gift, it'll kill their argument about you having cost her for changing your mind. But offer now, you don't want to be liable if the stock continues to slide, and if the stock recovers before she sells then it'd be pretty rude of her to ask for the money.

          Think about it from your sisters perspective, this is a lot of stress she is causing to save around $8500, and she's expecting you to put up $120,000!! As others have said, this money is at risk, your sister or her husband could have a gambling problem, they might get sick, they could get divorced, the risk on your money is considerable. Another way of looking at it is that your sister has valued your relationship at $8500, while expecting you to value it at $120,000

          Just to check, did she ask for the money before or after she bought the house?

          Edit - is there another family member you can speak to, and aunt or uncle who can maybe help out and moderate the conversation with your mum+sister? I would suggest discussing via email and cc'ing in this person, as opposed to a face to face conversation. You need to consider your responses, which can be difficult face to face. CC'ing in a family member keeps it civil, but can backlash if they end up taking sides.

          If you've been completely honest, send your sister and your mum a link to this thread.

        • I can't see why they need all those money for? Want to buy more ETF?
          As you said house is already purchased. Looks like greedy parent/sister wanting to make more money, using yours.

          Ask them why they need those money so urgently? Also consider buying ETF as well - now prices are low and you can make good profit in 1-2 years. But don't ask for recommendation ANY family member. Go see an accountant.

        • +1

          Good on you. A lot of people here have a lot of baggage. Someone has misunderstood something, you are the only one here who knows your sister and anyone that is willing to pass judgement on them without knowing them should be ignored. You know your sister, trust your gut.

    • +6

      It's ok to let go of toxic family members. Really. Just because they're related to you doesn't mean you have to let them treat you like dirt. It's more than ok to have a better life without such disrespect.

    • Since then Russia has invaded Ukraine and the value of my sister's stock has apparently dropped.

      S&P500 is down only -1.06% in the past month. That's nothing.

      She has even offered me an extra 9k out of her own pocket to sweeten the deal

      She will give you $9k so you only need to lend $111k and will get back from your sister $120k + interest within a year? That's a good deal. Take it.

      You can lend money but you want interest + inflation. Lending someone cash at 2% interest when only inflation is running at 4%… you might as well open the window and starting throwing your money out of it. What your family is asking you is damaging your wealth so you want fair deal that is win-win. Not win-lose.

    • +1

      If they care enough about you they'll be mad for a bit but come around.

      Family is family, if you not lending them the money has them cut off ties, then clearly you didn't mean much in the first place.

      If they couldn't afford the house without help they shouldn't have gone for it. They can't blame you for their mistakes. At most they'll lose the 0.25%, the 10% deposit is required to go unconditional, if they're as well off as you think, a couple of Ks won't make a dent.

      They have the right to ask, and you have the right to say no. Don't let someone take advantage of your lack of financial education, family or not.

    • +2

      You should update your original post with this update so people can see it easily.

      Please don't give in. If your family truly loves you, they will stop being angry soon and won't hold on to this grudge. Your are in your mid-30's and should be planning for your own life. Not having kids or a partner does not mean you don't have a life. They should understand that.

    • +2

      you must have a contract, she is a lawyer and can even write it, and you just have to get it checked. What if she declares bankruptcy? Even a contract wont protect you then. She could put assets into someone elses name

    • +2

      OP I think the best thing you can do right now is to find a really good psychologist AND a financial advisor. You are being manipulated and you need an objective professional to support you through this. Not because there is anything wrong with you, but because there is something very wrong going on here. Parental love doesn't look like this. There may be more to this than you know. The fact that she's screaming at you over wanting to see a financial advisor instead of wanting you protected too is such a red flag to me. She's your mother. Why isn't she making sure that even if you did do this, you'd be protected?

      Family isn't always blood. Family are the people who make you feel loved and supported whoever they are. I lost my Dad as a teenager, and I know that feeling you're feeling, it's scary AF but at the end of the day, this relationship is going to get burned one way or another.

      Go and talk to a financial advisor too. See if there's a way you can do this if you must, but it will need a lot of protection for you.

    • Even after all the information you have received, if you give her the money then you deserve to lose it.

      If your mother will stop talking to you over this, then she is a toxic person who you should cut out of your life anyway.

    • +4

      Your mother is not looking after you. She has coloured glasses and only cares about your sister.

      I come from a family who is very trusting with money, and I once lent money to my brother (with my mom being guarantor for it) but I only lent an amount I was happy to lose and largely because I wasn’t being pressured into it.

      The way your family is going about it is abusive and not thinking about what would happen to you if your sister defaults. What if her stocks crash? She wouldn’t be able to pay you back and poor you. You’re suffering all the risk in here with none of the rewards. Family is a two way street. Don’t be a doormat and put it back on them. Your sister was selfish to even ask you for the majority of your life savings so that she could make more money. And your mom is being selfish by pressuring you into something you don’t feel comfortable with. And not even allowing you to get a lawyer/contract or a financial advisor. Reasonable people would be okay with it. I get sometimes family isn’t reasonable, and it’s up to you to teach them.

      Yeah maybe you should have said no right away, but that doesn’t take away your right to say it now. The stocks value going down isn’t on you, it’s on your sister for investing in stocks. It’s what happens. At the end of the day it’s your life. Do whatever will make you happiest but do so with the full knowledge that you might not see the money ever again.

    • +1

      Sorry OP, you need to be stronger than this. They're guilt-tripping you and you're falling into their trap. Your sister and your mother knows you have a weak side.

      If 99% of the comments state not to do it, I would legit that that advice and not do it. This isn't some thread where to invest you 120k, this is YOUR MONEY that you will GIVE/GIFT your sister with a very high chance of not getting it back.

      Your sister chose the path she lead right now and dragging you into this. This isn't fair on you at all, I'll be hella pissed off if my family members asked for that sum of money when I worked my ass off for it and I want that money for my own place.

      Legit question: What has your sister said in terms of giving the money back?

    • This reaction is enough to show why it's best to never mix money into family and friendship matters. People show their true colours very quickly when it isn't favourable for them.

  • +3

    If they can afford mortgage repayments, and also pay you back at a rate of 10k per month they should be sorting out their own damn finances and not putting you on the spot.

  • +5

    Is this for real? Paying you 2% while she is making 5% from ETFs + capital gains?

    Tell your family, you are putting all your $200k into EFTs as well. Have no cash left. Why do you even have $200k in cash?

  • OP,
    Unlike most on this forum, I would suggest that you support your sister.
    I have loaned 400k to my sister in the past - we had a simple understanding - she leaves it in her offset account and pays me 0.5 % less interest than she would pay the bank.
    I get interest that is not taxable. She gets a small saving in interest.
    I can ask for the money to be redrawn at any time. She doesn't feel the pressure of carrying such a large loan.
    Last time, I left it in her account for 6 years.
    More recently, we rebuilt our place and she has about 200k sitting in my offset with terms exactly as I had with her.
    So its a win-win -win (if you include your mum).
    Stop being scared off by the bunch of nay-sayers on this forum - Its your family - help them when they are asking for it and don't be mean spirited.

    • +4

      Good to hear this worked out for you, but this situation is different.

      1. OP is being pressured into something they are uncertain about. Even with family there should be no expectations let alone threats of cutting off ties if you aren't willing to loan 60% of your savings.
      2. This is being used for a deposit not an offset I.e. the money can't be withdrawn at will
      3. There is a discrepancy in the level of financial awareness

      From the sounds of things, in your situation if you hadn't offered the $400k your sister wouldn't have cut you off or blamed you for anything and that's healthy.

      In this situation OP is being coerced into handing it over. At the moment they are saying a loan, in a year's time who's to say they won't pull the same cards and "defer" the repayments.

      You lend to friends and family what you're willing to give to them. If you aren't willing to give it, then don't lend it. And if they are willing to cut ties with you because you refuse to lend them the money (which based on what they were describing they could have saved up for in 2 years anyway), then they were never worth it.

    • +1

      Great to hear. Agree wholeheartedly.

      The interest you received from your sister is, however, most certainly taxable.

      • -1

        @bman20 - Only if it is not paid in cash :)

    • IMO, you're in the minority of families that can commit.

      From the posts the OP has made, the outcome of getting the money back is slim to zero.

      Even the mother doesn't want to draw up a contract and the sister is a lawyer, so that's even more manipulation because "family" is a reason not to have anything legally binding.

      It also seems the sister is convincing the mother to be on her side, after all she is a lawyer and most lawyers know how to talk.

      Also the fact the sister is making more money than the OP, 300k in ETF, has a partner, guilt-tripping she sold her stocks, ok she sold it…. she has money now…. so why does she need the money? The fact is.. she doesn't

    • While you are not declaring the interest as income, the ATO considers interest earned as income. Just as an fyi.

  • I think everyone has said what options you have, but Once this situation is over OP, always maintain the veil of having very little savings so no one asks. And if they ask for the amount you say you have going forward, you can make a fuss over the fact they have no shame of asking for literally all your savings.

  • +5

    Get the popcorn out when in a few years sister and husband divorce and work out who gets what…. A disaster.

    • good point - you've nailed it - if sis is the nasty bitch apparent from the way she's trying to manipulate the OP, then yeah she will almost certainly divorce and block OP's chances of ever getting their money back

      e.g. sis might move out, get ex to pay out settlement cash, then sign a life interest over to ex to live in the house for the rest of his life including dependents - so OP never sees their cash again

      if as I've seen, sis then moves overseas, remarries and is never seen again, except to come back to sign a sales contract when she thinks she can finally get all the money for herself

  • +1

    i dont usually comment on ozbargain, but I am going out of my way to say don't do it.

    $300k in EFTs? she and her husband have high paying jobs?

    do you have a high paying job?

    in the end, when its your turn to support your own kids, will they support you?

    Indeed, they are taking advantage of your generosity. Feel free to PM me if you want to discuss this further. but do NOT do it.

  • +4

    Get your $200K equivalent share to be on the title - changes the whole risk profile for you
    Sister only has to change some minor paperwork in the sales contract
    Your unsecured loan becomes secured

    • +2

      agreed, if she disputes this, you'll see her real intentions as it shows she's hiding something. if she really sees you as family, she would want to minimise the risk on your end as well, and not make you feel like a chump.

      • +3

        in theory, this would secure the loan - but families have a way of blocking good intentions

        I can imagine big sis would hold onto the property and never sell - just to prevent OP from ever getting their money back

        and remember, sis is a lawyer - they've already thought this through and have it all worked out to their advantage

        so best answer is just say NO. If they want to destroy your family over money, they never loved you anyway.

  • +3

    'It's hard to believe they are scamming me. I come from a close middle-class family. We are not like this… But I guess money can change people.'

    oh dear - your mom is screaming at you ? I'm guessing big sister has scammed your mom.

    This is just so wrong - your sister has $300K (OK down $9K whatever but so what - she's still got $290K - and she's asking you for money - she's a lawyer - guess what's gonna happen when she doesn't repay you and you want the money back ?

    She'll call it a gift and say 'where's the contract ? There was no agreement - there's nothing on paper'

    and when you ask your mom for support, guess which way she's gonna go - she's already indicated.

    They are using emotional blackmail to steal your money.

    Don't fall for it - you have already lost those relationships - we can see that already - if you give them the money you will lose that too.

    Stay strong - scream back at your mom - 'if you want to help big sis, how about your sell YOUR home and move in with them !?' - see how she takes to that ! Oh … unh … no … oh …

  • No!

  • if you have to ask this question.. then the answer is no.

  • +1

    If you give me 60k I can flip it to 120k and give that to your sister

  • OP, it is hard to say Yes to your sister when looking at your comments so far without further context/explanation.
    To help each other is one good thing but it has to be in a responsible way especially when dealing with huge sum of cash.
    Are you able to asses that?

    Feel free to reach out if you need to talk to someone.

  • Meet them in middle. Average of their ETF performance and your "high interest" bank interest.

  • +1

    My sister was in deep shit and I handed her 50k. In saying that when I handed it to her I knew I would never see that money again - based on the nature of her personality. There is a difference between you and me.

    If you hand over the money you might lose your family over it, if you don't hand it over you might lose your family over it. Wouldn't want to be in your spot. I am guessing you will give the money to your sister to keep the peace. Good luck to you either way. The risk of it going pear-shaped is definitely there.

    • +2

      I don't know man but $120k (out of $200k savings) is a helleva money.

      I wouldn't even want to ask anyone for that amount of money out of embarrassment. It is also not fair to you too. You might have something within that 12 months that could use that savings.

      But one thing that unfortunately strike me as warranted admonishment, your mom said you should have said no from the beginning rather than yes then no. Your sister might have sold her ETFs earlier to cut her losses (or made a profit???) but regardless, I think you should not hand out that much amount of money unless you are prepared to lose it.

  • +2

    No way! If my sister was single I would maybe help or even give the money. In your case, she's married and on top of what everyone else is saying family and money there's a good chance this idea was originally from the husband. Divorce = bye bye 120k. I don't know anyone who would take this kind of risk.

  • +1

    How long does it take for you to earn $120k net of tax? If it's 3 months, by all means, "lend" it to them knowing that you'll be fine if they don't repay.

    But if it takes years, then think again, unless you don't mind a hard slog. Also, think of contingencies, if you lost your job and couldn't find one for a few years, and needed the money for rent, would someone lend it to you, or you don't mind living on the streets?

    People who are laissez faire with borrowing money say crap things about family don't need to draw contracts, etc. because they are borrowing the money. There is no loss to them and possible gains. But you are the lender and need to protect yourself. Say you lend the money and the whole family gets hit by a bus and the husband's family claims the house's equity (sells house and repays whatever mortgage to the bank); that equity would include your free $120k. Are you okay to gift them the $120k?

  • +2

    F!XK NO!

    I have recently been bitten. PM me for the story.

    But, F!XK NO!

    Send her flowers, good wishes and smile.

    Money? F!XK NO!

    I know you might lose relationship, but its better to lose relationship with money then without money. Peace.

    • Can you send me your story?

  • +4

    the extraordinary thing here is that the sister asking for the money does not need it -

    she already has MORE CASH THAN THE OP !!!

    the fact that she is asking is flashing red flags left, right and centre for everyone to see.

    so - short answer is gee - you need money ? - I don't think so ! Just use that $300K sitting in your investment account.

    there's something VERY WRONG when someone who has more money than you, asks you for money.

  • It's ETF's guys. Not EFTs. EFT is eftpos.

    • EFT is not EFTPOS.
      POS is Point of Sale
      EFT is Electronic Funds Transfer
      EFTPOS is Electronic Funds Transfer Point of Sale

      • Sorry. You are correct. I meant EFT is generally related to EFTPOS. But yes EFT is it's own thing but either way these things are far away from being related to an ETF

  • +1

    What's a "high interest bank account? Where do you get one?

  • +1

    If you are considering loaning her the money, think about a repayment schedule for them to agree to. $10k a month? $5k every 2 weeks?
    Rather than them paying you back a lump sum at the end of 12 months, a regular repayment schedule lowers your risk of something happening to their finances in those 12 months and them not being able to pay you back all at once by the end. It also avoids the types of situations that go "oh we've been so busy with the new house/baby/change of jobs/loss of job/etc that we totally forgot! We can't pay you back right now but promise we will soon" followed by silence and delays and resentment by everyone.

  • Hi decisions2526,

    I don't want to influence you the wrong way so these are my thoughts, but they will be contradictory.

    I think it's good to invest in your family and friends. If you help others then when you're in trouble they will help you back. But you have to be a good judge of their character. At the same time though, what will happen if one of them loses their job, or suffers from the covid jabs. You'll have to be happy you won't get your money back, otherwise you lose your money and your relationship with the family (if you happen to be bitter about the loss). Or just wear your loss with a smile because of the fact you helped them being a good brother and family member you are. Otherwise don't lend it or lend what you can lose…But at the end of the day, I don't think you should put too much money in the bank anyway…I'm concerned bank bail-ins could occur too, so lending it to her could be a hedge in a way.

  • +1

    Im your long list brother.
    Can you "lend" me 80k…promise to hse my REST super account to pay you back.

  • Is your sister Anna Delvey?

  • +3

    $200K is a lot to lend to a family member - Personally I'd just say no.

    I was in a similar situation with a colleague that overbid on a property in Sydney - but they were in a more dire situation as they were at risk of losing their 10% deposit, and the bank wouldn't lend them the whole 80%.

    I was looking into a legal method with lawyers and all that, and my colleague was willing - but then I took a step back:

    "I don't even live a house in a swanky suburb - why would I hold myself back to help them get into a house they couldn't afford?"

    Literally - I would defer my retirement 5-10 years so they could just live in a nicer house than me? That's silly. That's not something I'd ever do for my brother/sister - especially if they have $300K in EFTs and just wanted to skip paying tax.

    I just said no and was really up front with my reasons.

  • +1

    Hey mate

    Unless your name is on the title, you're not investing in property. You're investing in your sister. It's an unsecured 120k personal loan at 2%. The risk/reward here is atrocious from your point of view.
    Re unsecured personal loans, CBA offers 11.5% - 18.5% and they have in house lawyers and no guilt when collecting. Unsecured maxes at 50k as well, they wouldn't offer 120k. Immediately, this tells you that you're getting (profanity) on this.
    https://www.commbank.com.au/personal-loans/fixed-rate-loan.h…

    To help yourself and your sister understand your position, put this to your sister:

    You don't want to give her a loan. You want a stake in the property she is buying. All the helping family stuff she is laying down can be reversed. You'd like a hand from your sibling to get into the property market.

    If no, why? If I'm cynical, it's because she wants all of the gains herself. Again, any references to helping your family can be reversed. "But what about financially helping your sibling?" - either could use this argument for either proposal.

    If she's worried about going into such a large investment with you then the whole thing is a crock of shit. If she was worried that you wouldn't be able to deal with losing 120k from your account - then why is she proposing you loan it to her?

    What if you both have a stake in the property and then suddenly you need the cash before she's ready to sell or refinance, like 3 months in? Well, the same thing that would happen if you run into trouble like 3 months into giving her a loan under her terms. Your sister could sell the ETFs! She could offer you an unsecured loan at 2% to make sure the property is secure and to help you out.

    Would she do it for you? Is she REALLY going to sell the ETFs and give you the money in a pinch? If yes, what's the problem with your proposal? Or is it more about making sure all of the gains are hers and all of the risks is yours?

    I honestly see no difference between the two proposals if the proposed loan is asked for in goodwill. If there is a problem with her opinion of your financial stability of you and she doesn't want to intertwine your money like that, then she has no business taking 120k if she secretly thinks you'd be (profanity) without it. If she really doesn't want to find herself selling the ETFs then you know her offer to sell them in a pinch is hollow. If she doesn't want to give YOU an unsecured loan at 2%, maybe due to terrible risk/reward, then we know what this is all really about. Might be helpful for both of you to consider.

  • +2

    Did you ask your sister why she doesn't want to sell the ETFs?

    What do you parents think about why she doesn't want to sell the ETFs?

    Obviously, its so she can make heaps more money etc. If you went through with this and trust her, you should be at least getting half of that (really more, since you are the one taking the risk).

    Partially a joke but its the principle: you could put most of your money in ETFs (even the same one, VAS), then all your money will be in ETFs, I suppose you wouldn't be expected to sell your ETFs.

    TBH its surprising that if your that close, and she's a tax lawyer, and you've shared how much money you have in the bank, that she hasn't advised you to put a good chunk of it into ETFs.

  • +4

    Absolutely not. If she has 300K why on this earth is she asking you to lend money. WTAF. Ask her to take the loan from a bank - interest rates are low around 2.5% and if something was to go wrong - she has to deal with the bank - not you. if she has 2 young children to support - its her responsibility - not yours. They can rent if they really want to provide a place of their kids. Don't lend her even $120. Tomorrow if she and her husband split up - wtf are you going to do ? Drink a cup of CONCRETE and harden up mate.

  • +1

    Let me get this straight, please correct me if I am wrong:

    1 - Your sister making more money than you
    2 - She has a partner which I assume has a job as well
    3 - She has 300k in ETF
    4 - She sold stocks due to the war
    5 - She's a lawyer and doesn't want to draw up a contract
    6 - No mention of her paying you back

    Please tell me, why she needs the money?

  • Can I borrow 10K?

  • +1

    Update pls op?

  • +1

    I'd say no but you do lend her the money, setup a financial agreement with lawyers (both you and her) to protect yourself.

    It is a lot of money to lose, if she can't pay you back.

  • -1

    Where you at OP can I borrow 50k? I promise I'll repay it, we family bruh

  • +2

    So what did you decide to do decisions2526? We need closure.

  • +2

    Tax lawyer eh - bet the EFTs are in some kind of trust them so she cannot access them. Maybe make you a member of the trust then and relinquish when paid out. At least then you will have some security and maybe some income, and some finance experience too.

  • Just say you are looking at buying your own place. It's your money you have to do what's right for yourself and your future. You're family will not be angry at you for that. Case closed.

    • Sounds like the mother would be. She has already screamed at him and he did not even say no, as far as we know.

    • -1

      *Your

  • So, what did you do?

  • +1

    so what happened to this guy haha

    • OP told the fam that they lost all the 💵 because of Putin's price hike and Putin's market crash.

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