Can you add your spouse to a mortgage loan without refinancing?



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If you’ve recently married, and you are merging your finances and assets, you may be wondering if you need to add your spouse’s name to your mortgage and whether it can be done without refinancing.

The short answer for both of these questions is no. Adding your spouse’s name to your mortgage has no real effect on their entitlement to the property or whether or not they can contribute to the loan.

It also isn’t possible to add someone new to your mortgage without refinancing the loan as the bank will have to assess their income before they make them liable for the mortgage debt.

It should be noted that a mortgage does not imply ownership over a property which is instead denoted by a land title.

Why add your partner to your mortgage?

The only advantage of adding your partner to your mortgage would be if you want to borrow more money and you need your partner’s income to be assessed as well in order to so. For couples who are 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 Emma get married

Alex and Emma have been living in Alex’s one-bedroom apartment in the inner-city since they got married last year. Emma has been contributing to the mortgage repayments since she moved in but her 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 Emma’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 he won’t be approved to borrow this amount of money with only his income taken into account so Alex and Emma decide to apply for the loan together to provide a more accurate picture of their household income now that they are married.

If you are planning on refinancing your loan and adding your partner, then it is advisable to use this chance to make sure you’re still getting a good deal on your mortgage. Use this as an opportunity to do a quick mortgage health check of 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 in your single days, your lifestyle may have changed and your loan requirements along with it.

You may want to look into fixing your rate for the first couple of years to secure some financial stability for your newly married life. Or perhaps you want to take some time off work to travel together, or to start a family, and you could benefit from having a repayment holiday feature or interest-only period attached to your loan.

Pros
  • Can base borrowing capacity on two incomes
  • Opportunity to shop around for more competitive loan
Cons
  • Reduces spouse’s capacity to take out other loans
  • Risk of being rejected if your spouse is not eligible for the loan

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 break down in future and the property has to be split as part of divorce proceedings, whether or not your partner’s name was on the deed or mortgage will also become 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 take into account 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.

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