Lending money for housing is always a risky business for the lender. Things get even more complicated when you lend money to a friend or relative because relations and emotions get into the scene. In case debtor fails to make repayments on time then problems arise and surely things get very complicated. So, it all comes down to the point that lender has to take some precautionary measures prior to lending money not only to friends, but also others. Lending money for housing always involves huge finances so one has to a number of steps for making sure that debtor is going to give him money back.
Borrow money for a house
How much to lend?
It‘s always good to lend only that amount, which you can risk losing. The chance is always present right from the start that you may never recover the amount. You will not get that much tense after lending the amount which is easy to give and in case of loss you can bear the damage to some extent. This is done for securing yourself, but this in no sense means that you should not make sure that money will get back to you.
You should draw a repayment plant along with debtor. This is something, which always secures you to a great degree. You should include in the agreement all the penalties, which will be imposed upon debtor if he fails to make the repayment on time. The lending money for housing plan should be formulated with the consent of debtor and lender and borrower both should agree with the details. It‘s very important that borrower must have a clear picture of repayment plan in mind because this will help in understanding his repaying responsibilities in a significant manner.
Entering into a written agreement is a very healthy activity. It doesn‘t matters that either you are entering into a simple or complicated agreement it should be agreed upon and signed by all the parties which are involved prior to the release of money. Sincere debtors will show no hesitation in signing the agreement on the other hand unwillingness of a part is clear indication that he or she is sincere in relation to giving money back so you have to be careful while lending money for housing.
Lenders need to keep in mind that their money is at stake more than anything else so they should not show any kind of relaxation. You should not show any sign of compromise on described points at the time of Lending money for housing. Only give money to those who depict sense of responsibility and have a good track record. It‘s good to investigate about the reputation of your borrower as this will help in evaluating that if he or she is sincere or not.
You should not take Lending money for housing as something very troublesome, but yes one has to make sure that he has taken all steps for securing the money. This will help in protecting your reputation and finances.