Buying as individual, expenditures assessed as a couple?

Hi all, first time poster, second time (to-be!) investor.

I’m about to get a pre-approval for the second IP. Now I’ve recently moved in with my boyfriend (9 months ago), but will go at it alone. The broker suggested to go joint tenants - something I’m not keen about since he’s not ready for homeownership yet (I’ve tried, hasn’t clicked).

He said the issue is that because I’m in a relationship with shared living expenses, the full amount of 'couple' living expenses are attributed to the application so there is less borrowing power. Is this a hard and fast rule, if so is there a way to bypass this?

We’ve kept our finances separate, incomes-expenses-bank accounts, no joint assets or dependents. We’re not financially dependent on each other either.

 

Is there a question beyond the broker suggestion ? You may not understand the principals concerning a spouse / partner and lenders consider lifestyle choices.

 

Brokers shouldn't be suggesting ownership structure. Beware!

 

I didn't think 9 months is classified as defacto relationship so technically you don't have a partner then why even declare that you are in a relationship? If you keep your finances separate and are not financially dependent on each other then don't see a need to include it. You may still need to show bank records that you only pay your share of expenses (like in a house mate scenario) Obviously seek professional advice. Plenty of great brokers on this forum.

 

Yes, I’m not clear if my living arrangement will definitely cause the mortgage to be assessed based on couple's expenses, or can I prove non-dependency and get a mortgage as a single person.

 

Giving him the benefit of the doubt, it could just be “the best way forward” since it does boost my serviceability by a lot. That said, I did say upfront that I won’t involve my boyfriend in this - so asking for other expert opinions to check it out .

 

I’m hoping that it’ll be the case. Proving it is not a problem, I’ve got everything in spreadsheets and statements. But I’m not familiar with how the bank looks at mortgage applications - I thought that was the case too (of housemate-like assessment, no problem to apply as standalone), so I was calm as a kitten until this came up. Checking with the experts here!

 

All sound reasons why many use a broker. They would ensure the specific issue is addressed so the question is addressed in the application.

 

Some lenders have a niche policy that allows you to apportion living expenses individually; as part of that assessment needs to be made around the non-loan party being able to service their own living/costs debt with full income verification etc. required.

 

If you do decide to go “joint”, carefully consider whether “joint tenants” or “tenants in common” is more appropriate to your lifestyle and aspirations.

 

Brokers cannot advise on ownership structure. It may or may not be the best way forward, but that is something you need legal advice on. What are the implications in terms of family law, succession law, control, asset protection etc. The trouble is the average person doesn't think about all these and thinks the broker is a professional 'advisor' and just accepts what they say not knowing they may not know what they are talking about.

 

There are different definitions of 'defacto' with lenders not defining what they mean by it. The definition under tax law differs from that for family law for example.
With a loans you would have a bit of flexibility as to what definition you use.

 

I think the OP was pretty clear. This is to be HER property alone, not joint.
I would also make sure you never use the partners $$$ for servicing etc . You dont want them later claiming they helped pay for your asset.

 

In short, yes!

 

Second time in as many weeks I've seen something like this.

It's just my own opinion, but if two people are keeping spearate accounts, covering their own share of household expenses and keeping things generally separate, then for borrowing purposes they're single. What people's sleeping arrangements are is irrelevant until there are joint assets and finances.

If there's any doubt, several lenders have policies around this. A simple declaration with Macquarie can easily mitigate this issue, but likely that's not even necessary here.

Anicdotally this problem tends to come up with women more than men in my experience.

 

I’m of the same opinion. I didn’t think it was an issue until it was brought up, and that sounded odd. I’ve got my ducks in a row, ready and able to buy, but to have my finances tied because... I entered a relationship?

I’m pushing for single applicant for sure. Thanks for the reassurance everyone! Catch you later if it doesn’t work out

 

I had hoped that years of education would’ve taught people a thing or two about critical thinking...

 

If you are talking about the average person, then there seems to be no critical thinking whatsoever!