Making everything clear for a family loan


Even within a family, or possibly especially within a family, it is wise to ensure that the terms of a loan are clear. From the outset it is important that all parties understand that the loan is not a gift, even if it might become so – for example, a gifted deposit – at a later date. 

The terms of the loan can be set out in a Loan Agreement. This would cover aspects including the length of time before the capital is meant to be repaid, a specified repayment date, the amount of the repayments and what would happen in the event of a default. Other topics which might need to be addressed include who would pay any additional costs incurred, what would happen in the event of severance and/or a wish from either party to amend the terms.

Don’t assume anything about a family loan

There have been several well-reported cases of parents and children who had different ideas about a sum of money which changed hands in order to purchase a property or pay for education and often one party is left feeling angry or misled.

There are a number of important factors both the borrower and the lender should consider and while informal family loans may seem straightforward at the start, over time feelings and financial needs change. Lending money to family should rarely be treated lightly and if open communication about the terms of a loan is established, it could save a lot of heartache and financial stress in the future.

Property solicitors for family gifts and loans

The property solicitors at Wellers can help you with all aspects of buying a house with parents’ money or lending money to a family member to finance a property purchase. Whether you have questions about a gifted deposit, a joint mortgage with parents or the implications of a family loan, we can help you understand your options when undertaking a Bank of Mum and Dad property transaction.

We have offices in London and the Southeast but can help you wherever you are in the UK. Simply call us or fill out an online enquiry form.

  • London
    London City office: 020 7481 2422
  • Bromley
    Bromley office: 020 8464 4242
  • Surrey
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  • Sevenoaks
    Sevenoaks office: 01732 457575
  • Chislehurst
    Chislehurst office: 020 8295 1989