Many people aspire to be a homeowner at some point in life. But, circumstances such as not earning enough income to qualify for a bond can often stand in the way. Fortunately, banks allow people to apply for home loans jointly.
“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,” says Dr. Simphiwe Madikizela, head of special projects at FNB Housing Finance. But, he warns that before applying for a joint bond, you should be aware of the advantages and disadvantages in order to avoid any pitfalls.
Pros:
- There is a high chance that the home loan application will be approved if both of you have a good credit record.
- You will afford to buy property that you wouldn’t otherwise afford with only your salary.
- You can get a good interest rate as affordability assessment is done on both parties.
- You are only liable for half of the bond repayments and legal fees.
Cons:
- Once the property is paid off, you will share ownership with another individual if you’re not married.
- Both parties’ credit records will be affected in the case of a default.
- Should one partner want to pull out of the bond agreement, a new application will have to be processed and a full credit assessment conducted to verify affordability.
- In addition, the home loan facility will be closed. This means that you will have to pay bond registration fees for the new home loan facility.
- Upon the approval of the loan, the bank may require both applicants to have adequate life cover that will be surrendered onto the bond.
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“Buying a property is a big commitment, and the decision to buy with someone else should not be taken lightly. Both parties need to work out all the eventualities before taking ownership as shortcomings could potentially set you back financially,” Dr. Simphiwe concludes.
