Ask Paul: Can we loan out $3.5 million through Facebook?


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Q. Is there anything stopping us (legally) from advertising via social media the offer of short-term bridging loans secured by a first mortgage?

It could be through our company or as individuals.

This is to invest an inheritance of around $3.5 million. - Cathy

ask paul paul clitheroe block of land debt car loans house deposit first house bridging finance social media investment loan bridging loans

A. Now this is interesting. I can say with confidence I have not been asked this in many decades of answering questions.

I suspect you would need some sort of broking licence.

I could find out quickly but I don't plan to as I reckon this is a really, really bad idea.

To me it looks like a great way to turn a large fortune into a small one.

Cathy, given your question I assume you know nothing about this area. And it is full of more traps and alligators than a swamp.

I reckon you will have every crook and rogue in town contact you with false documents and dodgy valuations. Your money will be gone in a flash.

If you want to put a small part of your money in peer-to-peer loans, talk to the leading companies in this area.

They can manage the risks and loans. Yes, they will take a clip but that is better than losing your $3.5 million, which I believe you will.

With the rest, please protect your good fortune and make sensible decisions. This could be shares, property and particularly super.

Sorry to sound so negative but I hate seeing people go into unregulated areas they know nothing about and lose the lot.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
August 9, 2018 7.27am

Good advice Paul, though whether they listen is another matter. Why do people who have so much money want to "invest" (I use the term loosely) in such hare-brained schemes?!

Is it because the human brain cannot deal with wealth that hasn't been personally earned and instead, gifted? I mean, this is why most lottery winners go bust, it's because they can't handle the fact that they didn't really earn it.

If it was me, it would go into a nice, balanced mix of index funds of shares, property and some bonds....then go and live off the interest. But that's me.

December 26, 2018 4.01pm

I totally agree with Pauls 'DON'T DO IT! advice. My father got scammed many times and even with some legal papers and first mortgagee documents '- it means nothing when a few of the borrower's went bankrupt. This man did'nt build on the $165k land and now the property with unpaid council rates, council lawyer fees and depreciatoon because of overgrown derelict state means property will only sell for around 75k, less council fees/agent fees/lawyers fees and propbably clean up fees mean there will probably be none or less than 5k return on my father 165k loan. So my father thought he would make a great 10% return to fast track his money and all he did was get loads of stress and lose the lot.....its just not worth it.
So I say just DON'T DO IT!

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