My daughter and I co-own an investment account since she was a minor. The account has a feature that allows borrowing against the principal. She now wants to borrow from that account to fix her home. Since the account is in both of our names (and has to remain that way) is it ribit if she pays 100% of the interest?
Assuming that the bank is owned by non-Jews, she is allowed to borrow from them, and pay them the interest. There is however another problem, since you are a co- owner, you are essentially cosigning her loan. Since if she doesn’t pay it back, the back will take the money from the account, which is partially owned by you. Therefore, you are considered a cosigner to the loan, which is problematic. What should be done is that the two of you should make a heter iska together. If the loan was already given to her, then the heter iska should be made together with a kinyan. Meaning that after the heter iska is signed, she should lift up your pen, similar to what is done at a wedding, which will help the heter iska work even though the loan was already given. (I am assuming that the bank has not taken any money out of the account due to not paying on time.)
I am attaching a link to download the heter iska for the both of you to sign. ISKA CONTRACT-English
Yora Deah 170-1