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ok I don't have all the info, so please bare with me. ill try my best to describe the situation to the best of my knowledge.
my dad is trying to get a loan for a house, but being retired he doesn't have much documented income recently. he found a bank that will give him a no-doc loan at a slightly higher rate but to do so they said they need him to deposit 250k into their bank.
first set of questions: is this deposit-for-loan thing normal? is it a sort of collateral so that if he defaults on the loan they just take the money out of his account? can they even do that? ive never heard of this before but maybe its totally legit.
he has 200k available and needs 50k. I have 50k basically making nothing in the bank (maybe .2%?) so I said I could lend it to him. he said he will pay it back within 6 months. for the sake of discussion, lets assume he will. we have a great relationship.
second set of questions: do we need to fill out a certain form to make the loan "official" or can I just give him the money? can I just make it whatever interest rate I want? what are the tax implications of this that we need to be aware of?
I think there is some sort of max amount someone can give another in a given year (13k maybe?) but if I loan it to him at a fair rate, can I give him more than that? do I pay taxes on the interest I earn on this loan?
I hope this makes sense. really my main concerns are:
(a) making sure he doesn't get ripped off by some weird loan at this bank (I will need to find out exactly which one it is but he says its a major international bank). he assures me its legit and I believe him but I always like being 110% sure on big stuff like this.
(b) making sure this loan is done correctly in terms of taxes on both of our ends and making sure its all legal. better to be safe than sorry.
(c) ignoring any other important factors that we need to consider. Ive never done anything like this and I'm not worried about the money. just doing everything correctly, legally, etc...I feel like there are more steps that need to be taken but I don't know what they are.
thanks for any help/suggestions/information.
my dad is trying to get a loan for a house, but being retired he doesn't have much documented income recently. he found a bank that will give him a no-doc loan at a slightly higher rate but to do so they said they need him to deposit 250k into their bank.
first set of questions: is this deposit-for-loan thing normal? is it a sort of collateral so that if he defaults on the loan they just take the money out of his account? can they even do that? ive never heard of this before but maybe its totally legit.
he has 200k available and needs 50k. I have 50k basically making nothing in the bank (maybe .2%?) so I said I could lend it to him. he said he will pay it back within 6 months. for the sake of discussion, lets assume he will. we have a great relationship.
second set of questions: do we need to fill out a certain form to make the loan "official" or can I just give him the money? can I just make it whatever interest rate I want? what are the tax implications of this that we need to be aware of?
I think there is some sort of max amount someone can give another in a given year (13k maybe?) but if I loan it to him at a fair rate, can I give him more than that? do I pay taxes on the interest I earn on this loan?
I hope this makes sense. really my main concerns are:
(a) making sure he doesn't get ripped off by some weird loan at this bank (I will need to find out exactly which one it is but he says its a major international bank). he assures me its legit and I believe him but I always like being 110% sure on big stuff like this.
(b) making sure this loan is done correctly in terms of taxes on both of our ends and making sure its all legal. better to be safe than sorry.
(c) ignoring any other important factors that we need to consider. Ive never done anything like this and I'm not worried about the money. just doing everything correctly, legally, etc...I feel like there are more steps that need to be taken but I don't know what they are.
thanks for any help/suggestions/information.