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Crisis looming at the bank of mum and dad. When Lending think it through & document the loan.

Crisis looming at the bank of mum and dad. When Lending think it through & document the loan.

The coronavirus crisis has the potential to strain otherwise strong family relationships. When entering into any lending agreement be sure to think it through fully and document and agreements.

Crisis looming at the bank of mum and dad

The coronavirus crisis has the potential to strain otherwise strong family relationships. We are only just beginning to witness some of the many legacies of COVID-19.

Last week a client called with a sobering story.

He and his wife are in their mid-70s, in reasonably good health, with $2m in capital, three grown-up children and eight grandchildren.

He told me that one of his children — who had recently lost their job as a result of COVID-19 — was pressuring him to “release his inheritance” early, to enable him to continue paying private school fees and a mortgage.

The conversation with his son, he told me, became strained when he told his son that he might not be able to help. His son then suggested he could borrow money from his father, offering an interest rate of 1.5 per cent.

Tim K. Dean, Credi Founder | Commentator & Expert on Family Lending, Bank of Mum & Dad and Neo-Credit Scores is available for media interviews and appearances. More…

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