We praise you for the halachic sophistication of your question. Indeed, there is an apparent prohibition for your son to pay the interest on a loan that you will take and transfer to him.[1] This is because two loans will actually exist. The bank will lend you $20,000. Then you will be lending your son $20,000, and he will return the principal plus interest. This is forbidden whether he pays the interest to you directly or to the recipient of your choice (i.e., the bank) as in the latter case, he is essentially paying the interest on your behalf, which is forbidden.
First, we will deal with your excellent suggestion. Not only is it forbidden for the borrower to give the lender any money beyond the principal, but it is also forbidden for the lender to receive from him any extra service or benefit of even moderate value.[2] A borrower certainly must not be mochel[3] money due to him from the lender as a condition of or in appreciation for the loan.[4] The question is whether to view the pledged present to your son as something that you are already obligated to your son, in which case he should not be mochel it in order to get the loan.
If one pledges to give a present to someone without performing an act of kinyan to concretize it, he is not obligated to honor his pledge. However, if it is a small present, he is considered to be mechusar amana (lacking in trustworthiness) if he does not follow through.[5] Since authorities may take some steps to pressure him to fulfill this moral obligation,[6] if the projected recipient waives the payment, this is considered a favor of monetary value. However, $10,000 is not a small present. (The determination of big and small is likely subjective[7] and should depend not only on the giver’s wealth, but also on the level of his relationship with the recipient. However, the tone of your question implies that a $10,000 present to your son is not something that you take lightly.) If you have no obligation to pay, then even if you are embarrassed to renege, your son’s forgoing part of the present in order to receive the loan is probably not considered ribbit.[8] If your son is considered poor, there is a problem because a promise of even a large present to a poor person is binding as a vow.[9] In case you are not confident that in your situation you have the right to use the idea of reducing the amount of the present, we offer another approach.
There are two ways that allow you to receive back more than $20,000 from your son. The simplest way is to make a heter iska, the standard solution for framing what might have been a loan into a (partial) investment that your son will be investing on your behalf. Your son will be required to give you profits from the investment on your behalf (according to a written forecast that you can make equal or similar to what the bank is charging), unless he corroborates that he did not achieve such profits.
A second, similar but less standard approach is slightly halachically preferable in a case in which it is known what the money is being used for.[10] Write a document that states that the $20,000 you are giving your son makes you a part owner of the house proportional to the cost. In this way, there will be no loan whatsoever but only an investment. State also that your son’s payments to the bank on your behalf will constitute a gradual buying out of your partnership plus rent he owes you corresponding to your current share in the apartment.[11] For more details about such a document, see The Laws of Ribbis,[12] or get back to us.[13]