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

The signatures are on, the documents are delivered, and the awkward conversation is officially behind you. Here are the questions Canadian lenders actually ask in the weeks after signing — answered straight.

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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.

Do I need to do anything now?

Almost nothing — and that’s the design. If the money hasn’t moved yet, send it by bank transfer or e-Transfer with your agreement’s payment reference in the message field, so the advance is provable forever. Then suggest, once, that the borrower set up an automatic recurring payment with their bank. After that, your job is to let the schedule work.

Should I remind them before each payment?

No — and resisting the urge is the most valuable thing a family lender does. The agreement exists precisely so that no human has to do the chasing. If payments arrive, stay quiet; the healthiest family loans are the ones nobody mentions for years. Reminders convert a working system back into a relationship strain.

What does the CRA need from me?

If the loan is interest-free: nothing. Repayments of principal are your own money coming home — not income, not reportable. If you charged interest, the interest you receive is taxable investment income and belongs on your return — the short version of the rules is here, and how families actually pick rates is here. There is no form for the loan itself.

What if a payment doesn’t arrive?

First assume logistics: a cancelled automatic payment after a bank switch is the most common culprit in the country. A light, blame-free message resolves most of it. If money is genuinely tight, renegotiate a smaller reliable amount in writing. And if it ever truly stalls, the Canadian court cases show exactly why your signed agreement puts you in a strong position — small claims courts across the provinces handle these routinely.

Where do my documents live?

Attached to your completion email: the signed agreement and the certificate of completion. Keep that email. Any copy can be independently verified at any time at verify.trylendright.com — the check confirms the document matches what was actually signed, byte for byte.

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.