Loan Tip: Changing Joint Ownership Percentages after Loan Approval

Just be careful when getting pre-approvals where there will be 2 or more borrowers. Different ownership percentages will result in slightly different servicing outcomes with some lender calculators. This is because income is passed in accordance with legal ownership as does tax deductions for the property.


Example

Homer and Marge go to the bank and gets a preapproval based on 20/80 ownership.

They decide to change the ownership to 50/50.

This could change serviceability because the rent they will receive from the property will be slightly different for each of them compared to the pre-app. Marge is not working so if her share of the rent has gone from 20% to 50% it could improve serviceability, the same with Homer being on the top marginal tax rate he receives less income and therefore less tax - if it is positive geared as jointly they would receive more income after tax.

If negative geared it could slightly drain serviceability as Homer’s tax savings would be less (that is if the lender is one that uses deductibility of interest in the servicing calcs).