After arresting debt, I finally managed to secure our first investment property last year. Now, my future brother in law is looking to go into a cafe business and would like me to go Guarantor on a loan.
I’m not terribly keen on the family connection, but thought i owe it to him to ask some questions:
If i go guarantor will it severely impede me trying to borrow for a second property? Or by becoming a silent partner, is that a bonus when trying to secure finance for the future, as I could use the business/property?Suggestions appreciated. [biggrin]
Willie.
Hi Willie
Yes no only will have an effect on your future borrowing capacity but also could have a dramatic effect if all goes sour.
Just remember if anything happens to the business and your future brother in law (Who may i guess never actually become your brother in law) is unable to make repayments the lender will come looking to you.
I must admit unless you can see some benefit in getting involved then i would steer clear.
Do we presume the your Brother I L and sister have no equity or security to offer hence you are being asked?
Cheers Richard
Ph: (07) 3720 1888
[email protected]
http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
If you feel you need to help then please avoid being a guarantor – if they go under you could be liable for all sorts of debts.
I would rather see you lend them a sum of money to secure their loan – this will limit your liability if anything goes bad.
But I think you should ask yourself if this is a business and people you would invest in. If the answer is no then you need to think hard about what you do.
It is a difficult situation to say no to family.
All the best,
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Willie,
I have a few thoughts on this matter.- Don’t do it
- DON’T DO IT!
- FFS!! SERIOUSLY DO NOT DO THIS!!!
regards, F.[cowboy2]
Why? Where do I start? The friends of my parents who lost 2 IPs, their home, 40 grand and a car and now rely on the pension where they would have been entirely self sufficient… I could list a dozen cases, all different, all disasterous where good folk have tried to do ‘the right thing’ even though their heads said no.hi Willie
I to wouldn’t go Guarantor unless you are going to get 33%(sister and brother in law) or 50% of the potential profit.
Then only if you believe the business will be a success.
If you lake the risk you need to get the profit also.
To me it doesn’t matter if its family, friends or partners each deal is done on a case by case basis and needs to be look at that way.here to help
Willy, I agree with the others- in fact, I do find it a little inconsiderate of him to ask you for such a big commitment just because he and your sister have plans to get married.
I hope that you can say NO without feeling the slightest bit guilty.
Celivia
Going guarantor is not a trivial matter. As others have said ….
DO NOT DO IT
I concur ..unless…[wink2]
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorHi Willie
I saw that this topic was about to slip off the first page and I thought that, in case you forgot about it, I would reply and keep it on the first page.
Your question brings to mind a line from Moulin Rouge that does something like this:
“Never fall in love with a woman who sells her body. IT ALWAYS ENDS UP BAD”.
I think what he was REALLY trying to say was “Never go guarantor for someone. IT ALWAYS ENDS UP BAD”.
Seriously though (although I am very serious about not going guarantor) you have just managed to get out of debt and are probably sleeping well for the first time in God knows how long. Why take such a massive risk for a return that may not be there?
Of course, that’s just my opinion. Or you could listen to the opinions of all the others who have responded!
Protect yourself to get ahead. Take calculated risks. This does not seem like one of them.
Good luck
K
You’ve obviously never met those solicitors that the Banks employ to draft the Guarantor documents.
Your major question of “Will it tie me down too much.” You can bet your bottom sox it will…if not the Banks will redraft it until it does.
They’ve had a good while to get it just right, including a few recent amendments and alterations to protect themselves against all these bleeding hearts and poor little innocents who thought that going guarantor was just a really cool, nice thing to do until being forcibly evicted from their home.
All of those loopholes and specific leniencies that the judges gave have also now been written into the document that you will be forced to sign. There is now nowhere for you to run and hide.
Will it tie you down ?? You betcha, it’ll nail your hide to the wall.
Originally posted by Willie:but thought i owe it to him to ask some questions
Seems to me like general feeling about here is you owe it to yourself to ask him how he has the nerve to request such a thing.
Why you feel obligated in any way to a future in law, is beyond me.
Munjy
gOOD LUCK IN THE CAFE BUSINESS, THAT,S PROBABLY WHERE YOU WILL END UP. iF THE BLOKE NEEDS A GARANTOR THE DEAL MUST BE MARGINAL SOMEHOW, AND ALL THOSE SORTS OF DEALS WILL IMPLODE SOMEHOW, ESPECIALLY IN THE CAFE BUSINESS. i HAVE HAD ABOUT SIX OF THESE AND AM STILL TRYING TO FIND OUT WHETHER I AM SANE OR NOT. tHE REALLY ONLY WAY TO DEAL WITH THIS SORT OF REQUEST IS TO SAY, TO THE BRO IN LAW. dO YOU THINK THIS BUSINESS IS A REAL GOOD DEAL? iF HE SAYS YES, THEN WHAT YOU SAY IS OK, I WILL BUY THE BUSINESS AND YOU CAN WORK FOR ME AND PAY IT OFF. tHAT WAY WHEN HE F—-S UP YOU CAN EITHER HIRE SOMEONE SMARTER, CALL ME OR DO IT YOURSELF. 6THER WISE THE BEST ADVICE I HAVE OS, GO SPEND 2-5GRAND ON A HOLIDAY SOMEWHERE, THINK ABOUT IT ALL AND COME BACK AND SAY YOU HAVE NOW GOT NO MONEY.
Geoffrey
There is a button on your keyboard called “Caps Lock”.
It is usual decorum on the forum to take it off when you respond to a post.
Cheers Richard
Ph: (07) 3720 1888
[email protected]
http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
Thanks for that, I have big hands and the fingers seem to hit that caps lock by accident, I don’t look up until to late. geoffrey.
Hmm Geoffrey
I’m not sure that telling someone who has just managed to get out of ‘arresting debt’ to blow 2 – 5 grand just to avoid having to tell someone they don’t want to go guarantor is very sage advice.
Or maybe it was satire and I’m missing the humour in your response.
K
Hello all,
many, many thanks for all your responses. It really helps to have non-emotional (not connected) advice.
Appreciate the wisdom of all who I can clearly learn much from.Kind regards, Willie.
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