Joint bond application: Everything you need to know

Article summary

• A joint bond is a bond guaranteed by at least two parties.
• It’s an option commonly employed by business partners, friends and family, and unmarried couples.
• Banks are more likely to approve the bond as various parties guarantee the payment.
• In the case of a couple, if one party defaults, the other will be responsible for the entire bond payment.

Purchasing a property together with friends, business partners, or a spouse, can be a great way to get on the property ladder.

We provide an overview of joint bond ownership so you can go into the deal prepared.

A quick summary of joint bond ownership

• This is a type of bond guaranteed by two or more parties.
• The additional parties agree to take on responsibility for paying the bond i another party defaults.
• Co-owners share expenses and admin.
• Co-owners all have to agree on any decisions regarding the property.
• The drawing of the co-ownership contract is an essential step in the process.

Benefits of joint bond ownership

• It’s a great option for unmarried couples, although it’s important to have the property registered under both names.
• It’s a great way for first-time homebuyers to get on the property ladder as security for the bond is guaranteed by co-owners.
• The bank is more likely to approve the bond as the various owners guarantee each others’ share of the bond.

The drawbacks

• The more people involved in co-ownership, the more admin is required.
• The more co-owners, the smaller the share of the profit each co-owner gets.
• Decisions have to be agreed on by all co-owners, which can hold up renovations or other decisions regarding the property.
• Complications if one investor decides to sell.
• Complications if two or more of the investors have a falling out.
• A partner may decide to sell their portion of the property, in which case other partners will be responsible for transfer duty and other accrued taxes.

What couples should know about joint bond ownership

• It’s nice to believe your love will be eternal, but you need to prepare for every eventuality and ensure a contract is drawn up.
• Banks don’t care what you and your partner may have agreed on privately; if your name is on the bond you’re responsible for the whole payment and will remain so if your partner drops out.
• If one partner falls behind on payments, the bank will hold the other responsible for the payments.
• If the property is sold for less than the bond amount, both partners will be held responsible for the difference.

The importance of the contract

All parties need to sign a co-ownership contract. Drawing up this contract is the most important step in the process, and you should seek legal advice if you’re engaging in co-ownership.

The contract should include:

• What is the objective of buying the property together?
• What happens if one co-owner wants to sell their share?
• How will decisions regarding the management of the property be made?
• Who takes responsibility for managing the property?
• The financial contribution required from each member.
• Conditions regarding sharing of the bond and access to the bond.

Joint bond applications on the rise

ooba Home Loans reports that of joint applications received, 75.3% were purchased with a spouse, whereas 24.7% were purchased with others (such as business partners or relatives).

If you’re looking to apply for a home loan, ooba Home Loans can assist you by submitting your application to multiple banks, allowing you to compare deals and choose the best one.

We also offer a range of tools that can make the homebuying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.