Individual vs Joint Home Loan

[CR34M3]

I’m looking at buying a property and I’ve been doing some number crunching and risk modelling to reassure myself what I can and cannot afford.

I will be occupying this property with another person who also contributes to household finances (albeit as a contract employee without a fixed monthly income). The current plan is to apply for an individual home loan with my (fixed, monthly) income alone. The idea being to remain safely within the banks’ affordability estimates for me and using this other (slightly irregular) income as a buffer against financial upsets.

I’ve been reading about joint loans and now I wonder if there’s possibly some benefit in it. My question is this: will applying for a joint home loan along with someone who is a contract worker make any difference?

Will the uncertainty regarding the additional income count against me or will the banks consider the income potential a positive?

Maybe someone has some knowledge regarding this and can give me some clarity?

 

[IzZzy]

Less risk = less interest rate. If its within your affordibility, then by adding the contract worker, this merely increases the affordability of the loan.

 

[hellfire]

Less risk = less interest rate. If its within your affordibility, then by adding the contract worker, this merely increases the affordability of the loan.

this depends.
Are they actually less risk? Get yours and their credit score from the bureau and check. Banks will average the combined score and use that number as your risk determinant.

Also, if you want to use the person as an affordability multiplier, keep in mind that the bank will want proof of income. If this person contracts for themselves (i.e. self employed) then they want a tedious amount of paperwork (3 years bank statements etc).

You've played a bit of a vague game around exactly with whom you want to purchase a property. You will have to register the bond and title deed in this person's name also. Changing the name on the bond / title deed requires a lot of legal paperwork as it's a full transfer and will also incur transfer taxes, conveyance fees and bank charges. So if this person isn't an SO (or a family member), consider carefully before entering this kind of commitment.

 

[CR34M3]

Less risk = less interest rate. If its within your affordibility, then by adding the contract worker, this merely increases the affordability of the loan.

This is what I thought…

this depends.
Are they actually less risk? Get yours and their credit score from the bureau and check. Banks will average the combined score and use that number as your risk determinant.

…and this is what I feared.

You've played a bit of a vague game around exactly with whom you want to purchase a property. You will have to register the bond and title deed in this person's name also. Changing the name on the bond / title deed requires a lot of legal paperwork as it's a full transfer and will also incur transfer taxes, conveyance fees and bank charges. So if this person isn't an SO (or a family member), consider carefully before entering this kind of commitment.

Looking at the OP again, it does sound vague… almost suspicious.
It is the SO, and seeing as she doesn’t have much of a credit history till now I thought this might even count in her favour. But if it comes at the detriment of the bond’s risk rating then it isn’t worth it.
Her income is a combination of fixed contract, once-off contract and freelance work. So I guess I’ll have to go have a chat with the bank first.

 

[hellfire]

This is what I thought…

…and this is what I feared.



Looking at the OP again, it does sound vague… almost suspicious.
It is the SO, and seeing as she doesn’t have much of a credit history till now I thought this might even count in her favour. But if it comes at the detriment of the bond’s risk rating then it isn’t worth it.
Her income is a combination of fixed contract, once-off contract and freelance work. So I guess I’ll have to go have a chat with the bank first.

I am now at peace with our decision