FAMILY LOAN

A family loan is a loan that is provided by one family member to another. This type of loan can be used for a variety of purposes, such as financing a home purchase, paying for education, starting a business, or covering unexpected expenses.

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Family loans can have advantages over traditional loans from financial institutions. For example, they may have lower interest rates or more flexible repayment terms. Additionally, family members may be more willing to lend money without requiring a credit check or collateral. 

In some cases some the parents may take a shareholding in the property and any future capital gain. Parties should get tax & legal advice on property sharing agreements. 

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However, there are also potential risks and drawbacks to family loans. For example, if the borrower is unable to repay the loan, it can strain or damage the relationship between family members. In addition, family loans may not be subject to the same legal protections and regulations as traditional loans, which can lead to misunderstandings or disputes.

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To avoid these potential issues, it is important to treat a family loan as a formal financial transaction. This may involve creating a written agreement that specifies the terms and conditions of the loan, such as the interest rate, repayment schedule, and consequences of default.

Both parties should also be aware of the potential risks and drawbacks of the loan before agreeing to it, and should communicate clearly and openly throughout the repayment process.

BUILDING A HOME OWNERSHIP PLAN