I'm 70. A relative offered me a $25,000 home loan secured by a lien that must be repaid within a year. Is that fair?

MW I'm 70. A relative offered me a $25,000 home loan secured by a lien that must be repaid within a year. Is that fair?

By Quentin Fottrell

'He also wants me to downsize and move'

"I receive Social Security benefits and own my home outright." (Photo subject is a model.)

Dear Quentin,

I'm 70. I receive Social Security benefits and own my home outright. A relative has offered to lend me $25,000 to make some urgent repairs. The loan would be interest-free, but he wants me to sign an "open-ended mortgage" that would place a lien on my home. He also wants me to downsize and move, and he also wants me to repay the loan within a year. What are the potential pitfalls of such an agreement? What happens if I'm not ready to move within a year?

Accepting & Trusting Homeowner

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You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com.

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There are a number of weird swerves in this generous, if convoluted, offer from your relative.

Dear Trusting,

If you decide to move, that should be your decision - not his.

This "open-ended mortgage" suggestion is risky. Sometimes called a "future-advance mortgage," it secures debt on your home and may even allow other debts to be secured under the same mortgage. It's all in the fine print. Not only does it create a lien against your home, but your relative could potentially foreclose on the property. If the document is broadly drafted, it may secure more than just the initial $25,000. What if the housing market changes in a year and you can't sell or buy? What if the repairs are more expensive and more prolonged than you predicted? It leaves you vulnerable.

There are a number of weird swerves in this generous, if convoluted, offer from your relative. His wanting you to repay the loan within a year is a big ask. You could expect to pay back a home-equity line of credit (HELOC), which works as revolving credit, within 10 years. You could have anywhere from five to 30 years to repay a home-equity loan; again, you pay more interest over the longer term for a lump sum. Although pricier, a bank might give you seven years to repay a personal loan; it wants to milk the rate, for sure, but it also gives you more agency over your future.

Are you happy there? Does your relative have an eye on this property for themselves?

The other concern - a big one - is that your relative is requiring you to sell your home after a year if you don't repay the loan in that amount of time. Sure, $25,000 is a chunk of change, but he's asking a lot of you for this act of kindness. And it makes me wonder just how altruistic that offer actually is. How long have you lived in this property? Are you happy there? Would you be better off in, say, a smaller cottage or apartment, if you are living primarily off Social Security? Does your relative have an eye on this property for themselves? These are some of my many questions (without any answers).

If your income makes it trickier for you to qualify for a traditional loan, you have alternatives. Federal Housing Administration loans are typically easier to qualify for than conventional mortgages and allow credit scores as low as 500 with a 10% down payment. Fannie Mae and Freddie Mac also offer programs that allow borrowers to qualify using Social Security and pension income, provided they meet the lender's usual credit and underwriting requirements. If you're a veteran or a surviving spouse, you may also be eligible for a Veteran Affairs-backed loan, which requires no down payment.

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Qualifying for a loan

A Moneyist Facebook Group reader plays devil's advocate. "I think your relative is giving you sound advice," she writes. "If you can't afford to maintain the home, it's worth considering your options. Could you take in a boarder to generate some extra income? I watched our retired neighbor become unable to maintain her home. The roof was failing, which led to extensive water damage. Ultimately, a house that should have sold for more than $500,000 was sold for $295,000 in cash to a flipper. She had also let the pool deteriorate, and by that point, the repair bill was over $100,000."

"It was heartbreaking to watch," she adds. "She eventually had a mental breakdown and moved in with her sister. She received some money from the sale of the house, but she lost so much in the process. It was an enormous home with high utility costs, and it had become too expensive to maintain. Ask yourself what happens if you resist downsizing. Could you end up losing everything? Consider taking out a loan secured by a lien on the house, making the necessary repairs, and then selling it on your own terms."

There are programs out there that help seniors, such as the Senior Citizen Home Assistance Program (SCHAP) in New York. If your relative wanted to help you, I suspect he would have offered you a fairer and, frankly, less scary deal. What about a simple promissory note or a mortgage securing the $25,000 only with no mandatory sale date within the next 12 months - but instead one that offers a payment schedule and a contingency if the repairs take longer than planned? Obviously, consult a real-estate attorney before you sign anything, but this offer feels off to me in more ways than one.

P.S. How's your FICO $(FICO)$ score? You might be better off going to a bank.

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Check out the Moneyist private Facebook group, where members help answer life's thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns.

Previous columns by Quentin Fottrell:

I'm 73 and live in a mobile home in Florida. Do I ditch my $2,400 home insurance?

'I am stuck in a low-income trap': I'm a teacher and very good at my job. Will I ever earn six figures?

'He has been emotionally abusive': My father, 75, is on oxygen and destitute. What do I owe him?

'She's a smoker': My mother, 55, has no car and no job. Should I buy her life insurance?

By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

-Quentin Fottrell

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June 23, 2026 08:19 ET (12:19 GMT)

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