Should I lend money to my adult child?

It can be a genuine help, but only lend what you can afford to lose without hardship, and be clear whether it's a loan or a gift. The healthiest family loans have agreed terms and are written down. If lending would jeopardise your own finances or retirement, it's usually wiser to offer a smaller amount or other support instead.

Should money to my child be a loan or a gift?

Decide deliberately and say it out loud. A loan is repaid; a gift is not. Whichever you choose, put it in writing — a signed loan agreement or a gift letter. This is especially important if the money goes toward a home, because mortgage lenders and the CRA treat loans and gifts differently.

How do I lend money to my child without ruining the relationship?

Agree on the amount, repayment, and any interest before the money moves, and write it down so no one relies on memory. Keep the tone warm and treat it as a normal arrangement between adults. The written agreement is what lets you avoid awkward reminders later, which is usually what causes friction.

Should I Lend Money to My Child? A Calm Guide

Someone in your corner just backed you with real money. These five habits — one of them today, the rest nearly automatic — are the difference between a loan nobody ever mentions again and one that hovers over every family dinner.

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The short version: Only lend what you can comfortably afford. Decide deliberately whether it's a loan or a gift, agree on repayment, and write it down. The parents who regret helping are almost always the ones who left the terms unspoken — not the ones who said no.

Habit 1 — Automate it today

Open your banking app and set up an automatic recurring payment (or scheduled e-Transfer) matching your agreement’s amounts and dates. This is the single habit that carries all the others: the payment happens whether you remember or not, and the relationship never has to think about money again.

Habit 2 — Reference every transfer

Put your agreement’s payment reference in the message field of every payment — scheduled or extra. Each one becomes a permanent, dated receipt in both bank records. If anyone ever needs to reconstruct what’s been repaid, the answer is already written down in a place nobody can edit.

Habit 3 — Glance quarterly

Every few months, take thirty seconds to confirm the automatic payment is still running. Bank account switches quietly cancel scheduled payments, and the borrower is always the last to know. Catching it yourself beats hearing about it.

Habit 4 — Bad news travels first class

If money tightens, tell your lender before a payment fails — never after three have. Offer a smaller amount you can actually sustain, and confirm the change in writing, even just by email. Borrowing from family, done well is mostly this one habit wearing different clothes.

Habit 5 — Keep the completion email

Your signed agreement and certificate are attached to it, and any copy can be independently verified at verify.trylendright.com whenever you need to prove the terms. One email, starred, is your entire filing system.

LendRight Editorial Team

We write plain-language guides on lending between family and friends in Canada, reviewed against current provincial and CRA rules. LendRight is not a law firm — this is general information, not legal advice.