In Laws Asking for Money
Hi All - As title suggests, my sister in law has asked us to help with fronting some cash for a real estate purchase. While there are many posts online and on WSO on the topic of whether to lend money to family, it’s good to get a refresh once in a while from the community on how best to approach, especially in the current uncertain environment.
some further colour on the SIL’s situation:
- They have asked us for up to $25k for downpayment. Besides us, the father in law will put up the remaining downpayment (believe another $45k or so)
- My sister in law has a decent paying job by non-finance/tech/law/medicine standards in a LCOL city, but spends as much as she makes. My impression is that she will payments if the purchase goes through since it’s a “bill”. The last time my wife lent her money for a laptop, the money was not returned for 2 years and after some pestering.
- My partner admitted that they have asked for open terms on the personal loan from us - I.e. no interest, no set tenor or repayment terms. Believe the father in law is offering his entire portion as a gift.
A bit on my spouse and I:
We make decent money in a HCOL city but not really to a degree where $20k is trivial. My wife is currently not working and on Mat leave. We have 2 young kids kids together. In the current environment, the sense I get is that no one is safe in their role (or certainly doesn’t feel safe), so job security risk is heightened in my view for the next 12 months or so.
We bought our principal residence recently and have a sizeable mortgage on the property. Isaved up and some additional amounts for mortgage balloon payments, which becomes an option later this year.
While I would love to help a family get started in life, I can’t help but shake the feeling that if we lend the money, we won’t see a penny of it back. I’m also afraid that this sets a precedence as my wife has a few other siblings, and none of them own a property. On the other hand, the rest of her family view us as wealthy, so saying no might make rub them the wrong way.
What does the community think?
tldr: should I lend money to sister in law for property purchase?
Edit: wow, thanks for all the feedback!to be no, and it is what I’m leaning towards. To be honest, I’ve been procrastinating on this topic and chose not to respond to their initial ask - I want to see if they would catch on their ask is overboard and make a more reasonable request. Nothing so far…one clarification is that SIL is currently in a LD relationship (believe her partner does some IG social media type work, but not big league). Also, the ask came from my father in law instead of SIL, which I found to be strange. He is generally a nice guy and miser.
Edit 2: Thanks again to all the feedback. My wife had a chat with the FIL - looks like the real scenario is FIL wanted to help SIL with property purchase but was short some cash for downpayment. In his mind, it’s better to borrow from us than the bank since we (unlike the bank) does not charge interest - terribly flawed reasoning since any money we set aside means more mortgage interest for us (even assuming he considers his offsprings’ money as a giant pot). Beyond that, the wife was more than happy to say no. I was glad we were on the same page about where family obligations end - and helping a sibling with a discretionary purchase of this size is clearly out of bounds.