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There is a loan agreement. The Lender granted 100% of the Loan

Resolved Question:

There is a loan agreement. The Lender granted 100% of the Loan to the Original Borrower.
The Original Borrower wishes that another party (New Borrower) will pay instead of him. The Borrower does not mind about this transaction.

How this agreement is called under English law? Where can I find template of these agreements in the Internet?
Submitted: 1 year ago.
Category: UK Law
Expert:  Senior Partner replied 1 year ago.
Thank you for your question. What do you mean the Borrower does not mind. The lender does not care where he receives payment from and form the lenders perspective he has no interest unless it is suggested that part of the repayment obligation is novated to a new borrower. Otherwise there simply has to be an agreement between the two borrowers - that the new borrower will pay part of the debt.

I doubt if you will find a precedent for this I am afraid.
Customer: replied 1 year ago.
Sorry, this is mistake "the Borrower does not mind"
Shall be: the Lender do not object that the third party will pay the debt.

This need to be fixed in the agreement. How this agreement is called? Is it important to stipulate in such agreement that New Borrower will get any consideration because he pay instead of the Initial Borrower?

As I can understand, the Borrower mustn't get consent from the Lender. So, probably it is possible to find agreement about the same between Initial Borrower and the New Borrower.
Expert:  Senior Partner replied 1 year ago.
Hi If the Lender is not involved then all it is an assumption of debt by the new borrower . I assume the new borrower is getting something for this but all you need is a simple agreement that say new borrower will repay x proportion of the loan and comply with the terms of the loan agreement etc. It sounds like a sub loan. I dont think you will find a free precedent for this - I would use a short commercial loan agreement and modify it. If the amount involved is significant I would use a lawyer rather than risk getting it wrong
Customer: replied 1 year ago.
Thank you!

" I dont think you will find a free precedent for this"
please feel free to refer to paid resource
Expert:  Senior Partner replied 1 year ago.
Sorry but as I said I do not think you will find a precedent - if this is a sub loan then you can use short form of commercial loan agreement but if it is an assumption of debt it will require careful drafting and I cannot think where you would find an accessible precedent . You might find something suitable from the Loan Market Association for example but membership to access it costs thousands .

Senior Partner, Solicitor
Category: UK Law
Satisfied Customers: 13246
Experience: 30 years experience in business law and related topics such as employment law
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