2016-11-22

Sharing A Home Loan: Yes or No?

Sharing A Home Loan: Yes or No?



Taking on a home loan or a mortgage can be a very heavy undertaking. Rather than bearing an entire loan by oneself, one way to lessen individual burdens and increase chances of getting a mortgage is to share it with someone else. Sometimes, joint home loans are taken on extremely expensive property that can’t be borne by one person. Other times, joint home loans are taken by two or more people who want to buy a commercial property for their business.

However, how does a joint work? 
The basic rules are that all the co-applicants must be listed as owners of the property. However, not everyone listed as the property owner needs to be a loan applicant.

As co-applicants of a certain loan, being married or related, for example parent and child, siblings or the like can increase your chances of securing the loan. However this is not necessary.

Are there any special requirements?  
As with other types of loans, all the applicants are required to prove that they have the financial capabilities to settle the loan on a monthly basis. However, most banks accept payments from only one account, whether that account is held jointly by the applicants or only held by one of the applicants is another matter that doesn’t carry much weight.

What to do before applying a shared loan?  
All the loan applicants have to contact a lawyer and sign a Loan Sharing Declaration with each other before going ahead with the loan application. They also function as each other’s guarantors throughout the loan repayment period.

What’s the benefits of sharing a loan?  
When sharing a loan, you are able to buy the property you want instead of having to settle for cheaper one. You also split the cost with other persons, making your loan burden half of what you need to pay if you bear the loan yourself.

There are also clauses that allow you to claim tax exemptions on the interest you pay on the loan. Individual banks offer different perks that you can have access to, like credit lines, mortgage offset accounts and so on.

What documents are needed?  
Usually, all that is needed are the personal contact and addresses of the applicants, proof of each applicant’s income and proof that the applicants are owners of the property for which the loan is being applied for.

What are the negative sides of a shared loan?  
There is no downside to having a shared loan, except that when you sell the property, all loan applicants have to agree to the sale and the terms/price of the sale.


(中文版请看这里:http://www.durianproperty.com.my/blog/article/1195)



Source: DurianProperty.com


 Property Buyer Guides & Tips, housing loan

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