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Family Loan - demand for immediate repayment

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  • Family Loan - demand for immediate repayment

    Hi All,

    I need some help with a problem that I have. I wanted to buy my first house a few years ago and I was going to get a mortgage from a bank. My grandad found out about it and told me that he would just lend me the money and I could pay him back £440 a Month for the next 25 years or until he died.

    I fell out with him last year and Iíve not spoken to him since because he did something very unpleasant.

    throughout this period I have always paid the money on time and in full.
    I recently received a letter from his solicitor demanding that I repaid him immediately. I ignored it because I didnít know what to do.

    I have just had a letter threatening to take me to court if I do not repay the money in full.

    There was no written agreement.

    I have always paid it back in time and have never missed a payment.

    is he entitled to sue for repayment of the money. Also would the loan come under the consumer credit act? It was not for a business purpose it was solely to purchase my home. There is no charge on the property as my conveyancing solicitors wouldnít allow it.

    I have some debts that I pay, and whilst I am on top of these, they will make it difficult for me to get a mortgage to pay him back. Any advice would be really welcome

    Tags: None

  • #2
    If there is no written agreement and you have maintained the repayment schedule he is (IMO anyway) whistling in the wind.

    You could respond to the solicitor, pointing out the circumstances and confirming you have no intention of breaching the contract; nor are you willing or able to repay the outstanding balance on demand.


    • #3
      Thank you for the reply x

      In the absence of any written agreement do you know if it is assumed that the loan would be repayable on demand or not please?


      • #4
        IMO it is most unlikely that a loan for £132,000 to a family member to save applying for a mortgage would be construed to be repayable on demand. It just doesn't make sense.

        As there was no written agreement and you have maintained monthly repayments for a number of years, he will have difficulty proving there were other unwritten agreed terms.

        It will be for him to prove his claim.

        In view of the possible size of any claim (i assume it will still be over £100,000) you might wish to confirm the position with a solicitor.


        • #5
          Thank you.

          Do you think that the consumer credit act would apply?


          • #6
            The loan could well fall under the Consumer Credit Act 1974, but it does depend on the circumstances.


            • #7
              How would I know please?


              • #8
                You will have to read and understand the act, and see if your loan agreement is exempt under the Act
                As it wasn't written down...............

                The real question is whether or not the loan is regulated or exempt under the Act.
                if it is a regulated agreement and the lender failed to obtain authorisation from the Financial Conduct Authority. your loan may not be enforceable and he may be guilty of a criminal offence.
                This crosses over with section 19 of the Financial Services and Markets Act 2000

                If this was a one off loan it most likely is exempt

                Here's an article about the exemptions to the Act which might help you decide.

                Are you hoping to show this was a regulated loan under the Act?


                • #9
                  Thanks for the reply. I am hoping that itís a regulated loan, as it obviously makes it very difficult to impose an imaginary clause for immediate repayment. Sorry og Iím being silly but o couldnít see the link to the article you mentioned.


                  • #10
                    Oops, seems I didn't actually attach it... sorry


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