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Can I add someone to my home loan?

Mark Bristow avatar
Mark Bristow
- 6 min read
Can I add someone to my home loan?

A joint application is one of the simplest and most common methods for two people to end up with their names on a mortgage. But adding a second person to a mortgage that’s already in place can be more complex, and will likely require refinancing.

Why add a second person to your mortgage?

One potential advantage of adding a second person to your mortgage would be if you need a second income in order to borrow more money when you refinance your home loan. For couples planning to start a family and upgrade their home or move to a pricier location, taking on a larger mortgage may be necessary to fund this process.

EXAMPLE – Alex and Morgan get married

Alex and Morgan have been living in Alex’s one-bedroom apartment in the inner-city since they got married last year. Morgan has been contributing to the mortgage repayments since they moved in, but their name is not on the loan as it was taken out before the couple met. 

With the couple looking to start a family soon, and move closer to Morgan’s parents for support, they start looking at three-bedroom houses in the suburbs. They determine that they will need to borrow an extra $500,000 to get the sort of home they want and with $300,000 still left on the existing loan they will need to refinance to a loan that allows them to borrow $800,000 all up. 

Alex knows that they won’t be approved to borrow this amount of money with only one income taken into account, so Alex and Morgan decide to apply for the loan together to provide a more accurate picture of their household income now that they are married.

Benefits

  • Can raise base borrowing capacity on two incomes
  • Opportunity to shop around for more competitive loan

Drawbacks

  • Risk of being rejected if your partner is not eligible for the loan
  • Reduces partner’s capacity to take out other loans

What about my spouse’s right to the property?

You may think that having your spouse’s name on the mortgage for the property will demonstrate their ownership. But the truth is, just because a person is listed on a mortgage, does not mean that they immediately have ownership. This would require their name being on the title deed.

If there is a relationship breakdown in the future and the property must be split as part of divorce proceedings, whether or not your partner’s name was on the mortgage may be of little value. While each case will be different, if you and your spouse have been sharing the home, they will be entitled to declare an “interest” in the property. Legal advice should be sought in all matters of this nature if you require more information.

For de facto couples, property settlements following a split will consider a multitude of factors, much like in a divorce. These can include whether formal or informal financial assistance was given by one partner to the other, but it will not require the partner’s name to be on the mortgage as proof of this assistance.

If necessary, it’s also possible to transfer your mortgage from one owner to another, such as when joint owners divorce, or one buys out the other.

Can a non-spouse be added to a mortgage?

While it’s most commonly a married spouse or de facto partner that gets added to an existing home loan, it’s technically possible to add anyone you choose to your mortgage. This could include:

  • Parents offering their support
  • Friends joining the property market
  • A business partner taking an interest in your property asset

How to add a second person to a mortgage

To add a second person to an existing mortgage, you would need:

  1. Help from a conveyancer to confirm that all the legal requirements are fulfilled with regards to the mortgage and the property title
  2. o refinance the mortgage, taking the second person’s income and expenses into account.

If you are planning on refinancing your loan and adding your partner, then you may want to compare refinancing home loans and make sure you’re still getting a good deal on your mortgage. You could use this as an opportunity to do a quick mortgage health check for your interest rate, the fees you’re paying and the features you want to have access to. Chances are, if it’s been a while since you took out the loan, your lifestyle may have changed and your loan requirements along with it.

For example, newly married or de facto couples may want to investigate fixing their rate for the first couple of years to secure some financial stability. Or perhaps those wanting to take some time off work to travel together, or to start a family, could benefit from a repayment holiday or interest-only period.

Two people can share a mortgage as joint tenants, or as tenants in common. In a joint tenant arrangement, both partners are equally responsible for the mortgage, and equally entitled to the property. If one owner passes away, their share will automatically go to their partner.

Tenants in common can choose how they divide the mortgage, whether 50/50, 60/40, or some other ratio. If one partner was to pass away, their will would determine who gets their share of the property. If tenants in common part ways for any other reason, one partner could offer to buy out the other’s share in the property, or a share could be sold or gifted to someone else.

While adding a married spouse or de facto partner to a mortgage usually doesn’t require paying stamp duty, the situation may be different when it comes to adding a business partner, friend, family member or other person to your mortgage. Because stamp duty requirements vary between Australia’s states and territories, and are frequently updated, it’s important to check what rules are in place in your area before you sign any documents.

Also keep in mind that Capital Gain Tax (CGT) may also apply, especially if the mortgage is for an investment property. Other costs to consider include conveyancing costs, and potentially fees and charges from refinancing your home loan, such as break fees if you’re on a fixed interest rate.  

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Product database updated 14 Jun, 2024

This article was reviewed by Personal Finance Editor Peter Terlato before it was published as part of RateCity's Fact Check process.