Joint bonds: here’s how to buy property as an unmarried couple

More and more couples are choosing to delay a trip down the aisle in favour of getting a foot on the property ladder.

“Of course, buying a home as unmarried partners has a few complications, but it’s not as difficult as you might think – particularly if you’re smart about it,” says Bill Rawson, chairman of the Rawson Property Group.

“It’s quite common for people to co-own property with friends, family or romantic partners. It’s a great way to maximise your buying potential, share the responsibilities of maintenance, and lay a solid foundation for a future property portfolio.”

Because it’s such a common occurrence, Rawson says most banks and bond originators are happy to assist unmarried couples (or other partnerships) in making joint bond applications and purchases. However, the only people who can really ensure your interests and investments are properly protected are you and your partner. Here are his tips on how to do exactly that:

“I always tell couples to think of joint property ownership as a business agreement,” says Rawson. “You’d never take a job or start a business without a contract in place, so don’t buy a property without one, either. It’s not about trust, or a lack thereof. It’s a plan of action in case life surprises you.”

While Rawson says asking a lawyer to draw up a customised joint-ownership agreement is always the best option, there are downloadable contract templates available online that can be used as affordable alternatives. Just be sure you cover all the possible contingencies, including:

  • How bond payments will be made.
  • How ownership and financial contributions will be apportioned.
  • How costs like insurance, maintenance, rates, taxes and home improvements will be split.
  • What happens if one partner fails to make their contributions.
  • What happens if one partner dies.
  • What happens if one person wants to move out or sell the property early.
  • Understand your liabilities.

Sadly, even the most iron-clad contract can’t protect you from all eventualities. According to Rawson, banks couldn’t care less what you and your partner have privately agreed on. As far as they’re concerned, if your name is on the bond, you’re responsible for the total bond amount – not just your share of it.

“If one partner falls behind on payments, the bank can claim the outstanding amount from the other bondholder,” says Rawson. “Likewise, if the property sells for less than the outstanding bond amount, the bank will hold everyone equally responsible for settling the difference. Having a contract in place makes it easier to address these issues after the fact, but it can’t prevent them from occurring, so it’s important to understand the risks and be certain that you’re comfortable sharing them with your partner.”

When submitting a joint bond application, you’ll need to decide who will be the primary applicant. You’ll both be thoroughly vetted, but the primary applicant tends to hold more sway over the favourability of banks’ offers.

“Choosing a primary applicant gives you the chance to put your best foot forward,” says Rawson, “but don’t be fooled into thinking that income is all that counts. A good bond originator will be able to assess whose financial profile is likely to be the most appealing to banks and get you the best offers. This varies a lot depending on things like credit history, and is an area in which it can be really valuable to have professional advice.”

According to Rawson, being a responsible joint home owner doesn’t end when you sign on the dotted line. He says keeping track of bond contributions and day-to-day expenses is equally important for protecting your investment.

“Tracking receipts and payments might not be the most romantic activity, but knowing exactly who contributed what makes life much easier when you decide to sell,” says Rawson. “It’s also a great way to keep an eye on exactly how much you’re putting into your investment to avoid overcapitalising and maximise profitability.

“That said, don’t get so caught up in the nitty gritty that you forget to enjoy your new home with your loved one. Home ownership is an adventure, and the best adventures are the ones that we share.”