Lending Money
How should you protect yourself when lending money to family members?
Older people often help their children or grandchildren by lending them money, co-signing a bank loan, or giving a personal guarantee. But you could lose a lot of money if you don't protect yourself by understanding the transaction and getting proper documents signed.
If you lend money to finance a house purchase, make sure you register a mortgage on the home to secure your interest. If you don't want to do that, you should at least get the borrower (and their spouse) to sign a promissory note with the loan terms.
If you guarantee a family member's bank loan, you are promising to pay the bank in full if the borrower doesn't repay the loan. You're responsible for the full amount of the loan, and the bank can come after you for it. Make sure that any guarantee you sign is for a specific amount.
