select
|

Pros and Cons of a joint home loan

If you’re battling to get onto the housing ladder, applying for a home loan together with someone else can improve your chances. You do however need to be aware of the pros and cons.

At some stage in life everyone aspires to have a home of their own, but circumstances such as not earning enough income to qualify for a bond can often come in the way. Fortunately, banks do allow individuals to apply for home loans jointly to be able to realise their dreams.

Dr Simphiwe Madikizela, Head of Special Projects at FNB Housing Finance says a joint application can help increase your chances of qualifying as both parties’ incomes and expenses are taken into account to assess the affordability based on their disposable income.

“Before applying for a joint bond, you should be aware of the advantages and disadvantages to avoid any pitfalls,” says Madikizela.

Pros:

• There is a high likelihood that the housing loan application will be approved if both individuals have a good credit record.
• You can afford to buy property that one partner wouldn’t necessarily afford with their salary alone.
• You could benefit from a good interest rate as affordability assessment is done on both parties.
• You are only liable for half of the bond payments and legal fees.

Cons:

• If you are not married, you will share ownership of the property with another individual once paid off.
• If there is a default, both partners’ credit records are affected.
• Should one partner want to pull out of the bond agreement, a new bond application will have to be processed and a full credit assessment conducted on the application to verify affordability.
• In addition, the home loan facility will be closed, which means you will have to pay bond registration fees for the new home loan facility.
• Upon the approval of the home loan, the bank may require both applicants to have adequate life cover that will be ceded onto the bond.

During the application process, both parties need to sign all the necessary documents such as the offer to purchase, home loan quote and legal documents, etc.

Most importantly, the monthly debit order has to come from one account. As a result, this will have to be agreed beforehand to ensure that there are always funds available to avoid defaulting on the monthly bond repayments.

“Buying a property is a big commitment and the decision to buy with someone else should not be taken lightly. The parties need to work out all the eventualities before taking ownership as shortcomings could potentially set you back financially,” concludes Madikizela.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 25 May 2018
      Reliable public transport systems moving a mass of commuters to and from work, keep a city’s economy moving. Not only do they have a positive impact on economic growth, successful rail links also influence property values.
    • 25 May 2018
      The live, play and visit environment that Centurion Residential Estate & Country Club offers continues to attract buyers looking for a very specific lifestyle and ambiance.
    • 25 May 2018
      As expected, the Monetary Policy Committee kept the repo rate stable, with analysts and market commentators ahead of yesterday's announcement (24 May 2018) pointing to a more hawkish stance amid a weaker rand, somewhat less stable global environment, and an eye on the inflation outlook – coupled with the increase in VAT and sizeable hike in the price of fue
    • 24 May 2018
      Most real estate professionals agree that 2017 was one the toughest years to date; an eminently challenging 12 months that subdued even the strongest markets - including the country’s economic powerhouse of Sandton.
    • 24 May 2018
      These are uncertain and challenging times for the real estate industry, but the non-profit organisation Rebosa is fighting for their interests and finding pragmatic solutions to industry issues such as the urgent need to fast-track transformation says Richard Gray, Rebosa chairman.
    • 24 May 2018
      The decision to invest in property isn’t one that’s taken lightly, or dealt with flippantly. The same should ring true when deciding on an estate agent partner to handle the letting out of your property.
    • 23 May 2018
      Homeowners who are thinking of selling and “trading up” to a bigger or a better home had better be quick now if they want to get the best deal.
    • 23 May 2018
      The new Loftus Park development in Arcadia is really going to boost the demand for homes and rental accommodation close by and the neighbouring suburb of Sunnyside, says Gerhard Kotzé, MD of estate agency group RealNet Holdings.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK