When it comes to investing in properties with a partner*, be it a spouse, a friend or colleague, funding rules can differ from lender to lender and would
depend on the nature of the relationship between the parties. The key things to be aware of are outlined below:
For the most part, lenders would assess applicants jointly if the partners are also (de facto) spouses. For example, in the case of Mr & Mrs Smith,
their combined assets, liabilities, income, and outgoings would be assessed, this would be the same across all banks and regardless of purchasing entity
(personal names, company, trust) assuming both parties are part of the proposed entity that is owning the property and borrowing the debt.
Non-spousal partnership applications (e.g. friends, parents + children, colleagues) are treated quite differently. Generally, applications are assessed
on a household basis. For example, if you have Mr & Mrs Parents & Mr & Mrs Children applying for funding, the application would be assessed
based on the Parents’ ability to service the loan in its entirety as well as that of the Childrens’ ability to service the
loan in its entirety. Harsh much? Not really. Home loans commonly make all debtors jointly and severally liable for the total
amount of the debt. While the parties may agree to service the loan in equal portions, the reality is that each party (i.e. household) is responsible
for the TOTAL debt. If one household fails to meet its repayment obligation, the other household will be liable for the full amount. Look at it this
way, in the case of a mortgagee sale where the bank is trying to recoup an unserviced loan, it is not as if they could sell half of the...
