Joint Home Loans – 3 Things You Need to Ask First!
We’re mostly going to talk about getting a home loan with the ‘love of your life’ but these principals could easily translate into any joint home loan. An open and honest financial dialogue between partners is not just important, it’s essential for the future of your relationship. Quite a few relationships can end due to debt or other financial strains. It’s time to set that date to chat about your money, past, present and future.
You think you know your significant ‘other’ and you do know them inside and out emotionally – but how well do you know them financially? You’re just about to embark on a huge commitment, where their attitudes towards money and budgets will also impact your lives and your financial futures.
There are three things you need to ask your partner before you even start the home loan process. You need to have a healthy and open discussion. It’s not about judging that person’s financial history, so much as understanding what you’re entering into and how much of the responsibility you’ll have alongside your partner. It’s also about getting the right loan based on honest information and the ability to make regular repayments.
Here are the three main questions you need to ask:
1. Have they ever defaulted on a loan before?
They may be debt free now but if they have a black mark on their credit history from the past, this may need some attention. Could they have missed a car or credit card repayment? Some bad credit marks can be disputed or removed. For argument's sake though, we’ll say this one can’t be. A good lender will still be able to secure your home loan and help you avoid any heartbreak. For example, an Alt Doc Loan could be appropriate in this circumstance.
2. Does your partner have any savings or a deposit and where did this money come from?
A good savings balance is only half of the story. Did they build regular savings over a long period of time? Making regular contributions shows a lender that someone can service their loan and it’s a good sign that they can make regular repayments. However, if that payment was a gift from their family, a redundancy payout or was won at the horses, although still a great deposit, it won’t help their credit score. Again, not a deal breaker for an expert lender, who can still place your application in the best possible light.
3. How have they dealt with financial difficulty in the past?
It’s hard to know what might happen in the future. One of you may lose their job or maybe you’ll receive an unexpectedly high bill, that may seem overwhelming. Although most of these situations can be planned for and overcome by talking to your financial broker, (at each hurdle). It’s how you and your partner strategically deal with these issues, as they come about that’s important. Anytime a difficulty arises, has your partner struggled through on their own or talked about it and proactively dealt with it?
Avoidance could be your undoing - so make your broker your counsellor and we’ll see you through those harder times.
Book an appointment with us today and we’ll make sure you and the love of your life or partner, iron out all the details before you start looking for your first home - this way you can secure a future that suits both of you.
*This information is not to be relied upon without speaking to your finance broker, tax agent or financial adviser.