Purchasing your first dream house and beginning a life with your partner can be thrilling and enjoyable until… the biggest factor comes into play. M O N E Y. Be careful of this little guy as it can make or break your relationship. Now, getting a joint loan is an option for couples who are ready to take the next step in life and buy their very own home. However, taking out a loan with another person can put you in a tight spot. Be it with your SO, sister, brother, or parents. But is it worth it? Read on to find out more.

The Good Side: 

• Get a larger loan amount

When applying for a joint loan with your partner or family/friends, it means you will be combining both of your incomes together to purchase a home! This will result in you being able to take on a bigger loan amount, which means your options for house shopping just got a whole lot better! You’ll be able to upsize or get a house in an even better location, or even have more $$ for the renovation from any cashback promos the developer is going to give you!

That’s the Number 1 benefit when taking a joint loan. However, the banks will examine your finances, especially your credit report to see whether you and the other person are suitable. Hence, there is a greater possibility and chance for your loan application to be approved due to the combined income! 

• Lesser financial burden

Sharing the loan and combining incomes means one thing; any payment-related to your homes, such as down payment, taxes or house fees, are split by the parties in the joint loan. So that means, your RM2000 bill is now divided by half and isn’t that so much easier for you and your pocket? But keep in mind that whilst your financial burden isn’t so heavy since it is borne by 2 (or more) people, both you and your joint loan partners’ repayment attitude will be taken into account by the bank and it will affect both of your credit reports.

The Bad Side: 

• Double credit check

So we’ve lightly touched on credit reports above and it is very important to know that maintaining your credit score and having a clean credit report is crucial. Not paying on time or having a bad credit score lowers your chance of loan approval which is a bad sign and a big no-no. Especially for joint loans, two incomes means two check-ups! The bank will check both of your credit scores thoroughly and see whether you or your joint partner can take this loan or is a good paymaster. Keep in mind that even if your credit report is clean and green, but your partner's credit score is poor and in the red zone, then goodbye loan! You would need to take responsibility for your partner and keep them in check on payment!

• Losing out on first-time homebuyer initiatives

The drawback of joint loans is that you will forfeit your chances of getting the first-time buyers initiatives since all parties in the joint loan will be considered as a homebuyer. You’ll need to sacrifice your opportunity of receiving these benefits and be okay with that. 

• Breakups can make it tough.

There’s no doubt about this point but you need to consider this before  you get into a joint loan. Breakups are tricky enough. But breakups whilst having a joint loan together.. All tied legally with the bank etc etc, things can get very complicated. So you’ll need to make sure that the person whom you’re getting into a joint loan with is something you’re willing to fight life with because getting out of a loan together isn’t going to be easy especially if you break up on bad terms. Nonetheless, there are certain steps that you can take to get out of the joint loan. Myra recommends that you do it amicably, of course

Firstly, you can either sell the house and split it monetarily. Or, you can buy out your partner's share, which involves dealing with the bank again in terms of approval. But that means you will take full responsibility for the payments. So be sure that you’re financially ready to take that on.

So yes, that’s joint loans! Overall, if you are very sure of the person whom you’re getting into a joint loan with, then it definitely is something that will help you get your home. But remember to choose your partner carefully to avoid any unnecessary drama-mama because you'll be in that home for many years!