Tuesday, 29 March 2016

To Buy OR Not To Buy

I have a dilemma. A good friend has asked for my help and I can't say no. She wants to buy a property, and she needs me to put my name on the mortgage paperwork so she gets approved for a loan. By doing so, I am liable for part of the loan.

When she first approached me, I was more than happy to help out as a part of me wanted to make her lifelong dream of owning her own house a reality. But now, I have to put a stop to it.

What started out to be a small loan has now ballooned to half a million dollars. This is for a tiny apartment on the outskirts of the city. And I will be liable for approximately one hundred thousand dollars. This is way, way more than what I am comfortable with. More so as she is over 65 years of age and is currently unemployed.

"Don't worry!" She says whenever I raise my concerns. "It is only for twelve months and then I will remove your name from the paperwork."

"But I can't help it. You should think of retirement. Your plan at this stage of your life is to retire or semi-retire if you want to keep working. The plan shouldn't involve blowing your hefty savings on a mortgage. At your age, you shouldn't be thinking of full-time work either. Don't you want to spend time with your grandchildren, friends and enjoy life?"

I could tell by her expression it wasn't worth the argument. I was wasting my breath. She had made up her mind.

A part of me hates her for putting me in such a position. Don't get me wrong, I want to help her, but for fucks sake, how about meeting me half way and not borrow half a million? Not only that, there would be implications for me too. It will impact me both financially and with the tax office. But from her expression and past conversations, she wants what she wants.

When she had first approached me with the request, my partner was in agreement. He thought, as did I, that she would have a small mortgage. It made so much more sense especially for her. But from the way this conversation was going, and the look in Marion's eyes, it remained clear I was wasting my breath. Just like the other dozen or so times. This situation also created tension at home and is another reason why I tried to get Marion to see some sense.

"Sam, I have it all worked out. I will be fine. There is other money coming my way. I just need you to sign that paperwork."

"What do you mean other money?" I queried, taking a deep breath to calm myself as my anger spiked. This was new.  I thought back to all our conversations, and not once was it mentioned. "How come you never mentioned this before? Surely, you would disclose this information to me? I do have a share in this albeit in name only."

"Don't worry. I will be fine. Sign the paperwork and in three months time, your name won't be on the paperwork."

We were going in circles! Like all the other times, this conversation would not go the way I want it to. She continued to ignore everything I said to her. I was getting seriously pissed off at her but at the same time, I felt guilty for my attitude especially as she saw it as being negative.

All these factors combined, made me lose sleep. My insomnia was at a record high. As a result, my work suffered, along with my interactions with other people, particularly with my partner.

I didn't know what else to do or say. Marion had just recently got into the habit of not listening to any words of caution. The minute she heard something positive, she clung to it like it was a lifeline and ignored everything else. 

Being positive is well and good. But when there is a lot at stake, such as a huge debt, her sanity and her welfare. I would not let her get into this with only half an eye open.

Letting the size of the loan slide to the side for the moment, I shifted my focus to another element of her promise. She first said twelve months, now suddenly it was three months? What was all that about? How come in a space of a few minutes, she is promising that I would be free from any obligations in three months?

Racking my brains, I couldn't discern how that would be the case. Was she going to come into even more money? And even if this extra money shaved off a good portion of the balance, she would have to prove to the mortgage provider of her ability to service the loan. Now, I was no finance expert but I am pretty sure that having a job goes a long way to prove that she can be the sole buyer.

"So, what will the process be in three months time?" I finally asked, unable to leave it alone. I had to ask. I had to get it clear in my head and hers so that there were no surprises down the road.

"I will get your name removed. It might even happen in just a months time." She promptly responded.

"I don't understand how. Can you explain the process?"

I could see she was struggling to explain as she got more and more flustered. Finally, she gave up and asked me to talk to Brad. 

I would do just that and made a mental note to make an appointment to talk to her Financial Consultant. I needed to get clear answers. The way Marion was talking, everything was rosy and easy but my gut and past experiences told me otherwise.

My ringing phone and subsequent dash out the door to pick up my son from the train station ended the conversation. Once I had a bit more information, I would hash this out with her. Again! She had to understand what she was getting into and stop living in fairyland.

My chat with Brad cleared the air somewhat. It wasn't as easy peasy as Marion had made it out to be. As I suspected, she had to prove that she could service the loan. To do that, she had to have a full-time job and show evidence she would not be living on air. She would have to provide three months worth of payslips to prove her ability to service the loan. If the mortgage company did not like what they saw, it would take longer before she became a sole owner. Which made one year more realistic than the three months and it would definitely not happen in a months time.

There were other factors I, as an investor, would have to take into account. But I had enough information and facts to talk to her again. And I did. I made her cry, but she said nothing negative. She muttered, at one point, that she just wanted to own a house. Hearing that, I felt guilty all over again. I know I was doing the right thing, but I couldn't help feeling like I was letting her down.

So now, she has also made peace with the fact that she might never own her own property. She is hoping to work part-time as full time retirement is not for her. A part of her is also on the look out for a property with a smaller mortgage. Hopefully, she finds something soon and ends up fulfilling her dream.  

Copyright Tia J. Lee 2016
All Rights Reserved.

Photo from: Images_of_Money

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