- A joint bond is a bond guaranteed by at least two parties.
- The income and credit records of all parties are assessed by the bank during the home loan application process.
- In the case of a couple, if one party defaults, the other will be responsible for the entire bond payment.
Most people are aware that certain legal protections apply to married couples who purchase a home. But what about unmarried couples? They have the option of joint bond ownership.
What is joint bond ownership?
A type of bond guaranteed by at least two parties. The additional parties agree to take on responsibility for paying the bond if the first party defaults.
More unmarried couples are applying for joint bond ownership
Joint bonds can be held by companies, but they can also be held by a couple.
Even couples who aren’t ready to tie the knot have options when it comes to a joint bond.
How does the joint bond ownership work?
- The parties have to sign a joint bond agreement. It’s assumed that each party owns 50% of the property.
- Once the bond is paid off, the couple will co-own the property.
Applying for a joint bond
- The application process is the same as applying for an individual home loan, except that the bank will take into account the incomes and credit record of both parties.
- A prime applicant must be determined, even though both parties will be vetted.
- The bank will be happy to approve a joint bond as it means less risk, since one party will be guaranteeing the bond.
Understanding the implications
- If one of the joint bond holders chooses to withdraw, the other will be responsible for the entire payment. The bank does not care about the status of the relationship.
- A new deal can be signed with the bank if one party leaves. However, that party will have to consent to having their name removed from the bond document. If they refuse to do so, an attorney may need to be consulted.
Getting prequalified can simplify your agreement
Our free, online tool, the Bond Indicator, is usually used by an individual to determine what home loan they will qualify for. However, it can be used by a couple as well.
It can perform the necessary credit checks, then advise the loan amount that a couple can obtain in order to minimise the chance of loan defaults for which both would be liable.
You can also get prequalified by contacting an expert at ooba Home Loans.
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