Borrow From a Family Trust
Family mortgages give borrowers an edge and lenders a healthy return.

Last year, when Joe and Jacqui Polaneczky decided to make an offer on a condo in Chicago’s Lincoln Park neighborhood, they didn’t call a bank or credit union. Instead, they turned to the Bank of Polaneczky, borrowing money from a family trust set up by Jacqui’s grandmother.
The couple’s interest rate is slightly lower than rates for bank-financed mortgages, and the trust is earning a higher return than it would get from a bank CD or money market fund, Joe says. The deal also enabled the Polaneczkys to make a cash offer for the condo. That gave the couple an advantage over other buyers interested in the property.
For a one-time fee of $725, National Family Mortgage, a service that facilitates intra-family loans, handled the details. That included drawing up the promissory note, recording the deed and making sure the arrangement passed IRS muster so the couple can deduct the interest they pay and the trust doesn’t run afoul of gift-tax rules.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The average interest rate on NFM family mortgages is 3.27%. Joe says he liked the idea of keeping the money in the family. That sentiment is shared by many parents who are confident their children have the wherewithal to repay the loan, says NFM chief executive Timothy Burke. “They come to the conclusion, Why should they pay the bank when they could pay me?”
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.
-
Stock Market Today: Great Power Affairs Mesmerize Markets
The U.S. and China are at least talking about talking about tariffs, and investors, traders and speculators are showing a little less fear.
By David Dittman
-
Is Walmart Plus Worth It?
There are tons of exciting Walmart Plus benefits – but are they worth the $98 annual fee?
By Rachael Green
-
Roth IRA Contribution Limits for 2025
Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
By Jackie Stewart
-
How to Search For Foreclosures Near You: Best Websites for Listings
Making Your Money Last Searching for a foreclosed home? These top-rated foreclosure websites — including free, paid and government options — can help you find listings near you.
By Bob Niedt
-
Luxury Home Prices Rise as the Rich Dodge High Mortgage Rates
Luxury home prices rose 9% to the highest third-quarter level on record, Redfin reports, growing nearly three times faster than non-luxury prices.
By Kathryn Pomroy
-
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross
-
Five Ways to a Cheap Last-Minute Vacation
Travel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
By Vaishali Varu
-
How to Figure Out How Much Life Insurance You Need
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life insurance needs.
By Kimberly Lankford
-
Amazon Big Deal Days Is Coming! We’ve Got All the Details
Amazon Prime To kick off the holiday season with a bang, Amazon Big Deal Days runs Tuesday, October 8 and Wednesday, October 9.
By Bob Niedt
-
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker