Owning a home after you get married or couple up is a dream for many, but a home mortgage is a huge decision. While it’s common to apply for a joint home loan with your spouse, sometimes people find it makes sense to apply for a mortgage alone. This may be the case if there are children from a previous relationship or inheritance considerations.
Below are some of the other reasons people choose to go solo.
If your partner has debt
If your spouse has considerable debt, applying for a home loan alone may make sense.
When you apply together, the lender will consider your combined total monthly debt obligations, which also includes repayment on the current loan application. If this exceeds 40 per cent of your combined gross income, your application may be rejected or you may not receive favourable mortgage terms, such as lower interest rates.
If your partner has a poor credit score
Having a good credit score will not offset your partner’s poor credit score as it’s not a weighted sum. Lenders consider low credit from either party as risky, so your application may either be rejected or you may have to pay a higher rate of interest. Financial institutions may also reject your joint loan application if your spouse has bankruptcy or foreclosure on their credit history.
If you wish to keep your finances separate
Some couples like to keep their money separate for a variety of reasons. Perhaps there are children from previous relationships to think about or perhaps that’s just what you’ve grown used to. In this scenario, it may work to apply for a mortgage alone.
How to determine if applying solo is a good option
If you are asking yourself ‘can I apply for a home loan without my spouse?’, consider the pros and cons. If your spouse has a low credit score or a complicated financial history, you may find applying for a home loan on your own makes a bit more sense. However, you’ll have to prove to lenders you’re in a strong financial position yourself. .
Before you decide to apply for a loan without your spouse, it’s important to do the sums and potentially seek advice about whether it’s the right move for you.