Hi all I have a question that I need answered mainly out of interest:
If you borrow with another party ie friend or family member I am led to believe that both parties have to be able to afford the loan repayments on their own in the event of one of the parties supposedly taking off? Is this correct?
This leads me to my next question of how is a Husband who works and a wife that stays at home any different, both parties can take off and technically the process would be no different to the above repossession credit black mark wise?
Thirdly you read numerous recommendations in magazines etc where they encourage you to buy with another person if you cannot afford the repayments etc on your own, but if the above applies how does this work?
Cheers
No! If you buy together they calculate your ability to pay together. You are in effect liable for half the loan.
So with a husband and wife they look at incomings (wages, rent etc). And outgoings (interest etc) to see your ability to borrow.
Yes that's the reason magazines suggest buying in partnership if the bank will not lend you money alone.
Hi Fredo,
Yes usually if you borrow with another party, it will be jointly and severally, meaning that each of you will be liable for the full amount of the loan.
Whoever are on the documents will have a "black mark' if there is a default.
You would only buy with another party if you have good reasons, such as you cannot borrow on your own; or between husband and wife. Remember too many cooks spoil the food.
People have differing opinions, and one might want to sell and the other not.
You should also consult a good broker, to get the run down on what the bank will look at. There are a few contributors on this site you should speak with.
That is exactly my point if you cannot afford it on your own but they assess both of you to see if you can afford it on your own it won’t work.
So how is husband and wife buying together different from two friends buying together??
Not looking to borrow with someone but just curious.
Lenders assess you as being jointly and severably liable for the entire loan but this does not determine your serviceability.
If you buy with another person lenders will add both of your incomes together and take both of your liabilities.
If you are unrelated you will be assessed as 2 single persons as far as the living allowance expense is concerned.Downside is that if you then decide to purchase with your wife or spouse you will with,most lenders only be able to have 50% of the rent from the property you own with your friend added to your income however 100% of the loan liability.
There are a few lenders with an exception to this rule.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Yeah, its two different things, not one.
1. Serviceability (ability to pay back the loan), this takes into account incomes of everyone on the loan when determining whether the lender thinks you'll be able to service the loan.
2. Liability. The whole "jointly and severably" liable thing basically means that if things do go bad, you can be fully liable for the whole loan. So say you borrow with a friend, but he goes bankrupt, the lender will hold you liable for the whole loan, not just your half.
Quote:If you borrow with another party ie friend or family member I am led to believe that both parties have to be able to afford the loan repayments on their own in the event of one of the parties supposedly taking off? Is this correct?So basically, no that isn't correct. Its not that both parties need to be able to afford the loan repayments on their own, its that they could end up becoming responsible for the full loan payments if circumstances go bad.
Ahhh should have bought the last 2 props alone. Then she can buy some more on her own.
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