Joint Mortgage Lending: Pros, Cons & Recommendations
At some point in life especially when you get married, couple’s wish to acquire a house or property. Considering the possibility of arranging a joint mortgage loan is a very good option. That is, a loan you can access by adding your own income and your spouse.
But what are the advantages and disadvantages of this type of credit? Here we tell you.
a) Chances of approval increases: In most cases, adding income of both husband and wife will increase your chance of getting a mortgage loan.
b) You can get a higher amount: Since the amount of income will be higher, you could get a higher amount and therefore a better property.
c) Strengthens ties: If your relationship is healthy and lasting, buying and paying for a property together can reinforce the commitment and satisfaction of achieving something important between the two of you.
a) Both are responsible: If payment is delayed or stopped for reasons not stipulated in the contract, both the owner and the co-contractor have the same responsibilities.
b) Your record may be affected: Credit rating may be affected if EMIs are not paid on time or fully.
c) The future is uncertain: Over the years, relationships may deteriorate, in which case a joint mortgage can be a real headache.
Having clarified the pros and cons of joint loan, let’s move on to general and very important recommendations:
Decide and plan it together: Calculate how much each can contribute and for how many years. Not only consider your current income and expenses, but also consider the years you have to continue generating income and the needs you will have in the future, since they may be substantially different.
Set a limit: Based on this, determine the maximum amount you can apply for. Keep in mind that a mortgage loan is a long-term commitment and therefore requires prior and objective planning. Avoid being victims of enthusiasm and expectations that are uncertain, be realistic!
Give yourself time to review different proposals: Analyze the rate you are offered, the term, the commissions, the cost of insurance, the penalties. The same applies to the property: evaluate its capital gain, the services available, its location, etc. Acquiring a property is an important decision, do not lose sight of it.
Check what happens in case of death: In some cases, when this happens, the credit is liquidated in its totality. While, in others, the final amount to be disbursed is reduced. It is not nice to think about that possibility, but it is better to know what you can face in case the other party is no longer there.
Find out what happens in case of a dispute: A mortgage loan is a long-term commitment, a period in which things like breakups and fights of all kinds can happen. Although it’s not encouraging to contemplate that possibility, but you need to consider it and be aware of the repurcussions.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.