Hi Forum Experts, Long-time lurker and first-time poster here. Looking to get your understanding of a 'tenants in common' agreement, specifically the serviceability part of obtaining a mortgage under such an agreement. I'm not looking for legal advice; I have a solicitor already. But before I discuss this in detail with him, I just wanted to make sure I understood serviceability within this context. Here goes... Whilst researching this topic, I read this article Co-Ownership Investment Loan | Buy a property with a friend which provides a scenario/example and then states 'The bank will assess the couple and Tim as being equally responsible for the investment loan so they will all have to meet the serviceability requirements of a 95% investment loan.' I find this to be confusing because, if 'the couple' and 'Tim' can all meet the serviceability requirements of the loan, why would they need a tenants in common agreement? Surely they can individually and separately service the loan? Is my reasoning correct, or have I misunderstood something? Kind regards, PinkPiers
Usually a TIC agreement is used to convert a joint tenancy to TIC (In equal shares !!!). If it changes to anything else a CGT and duties event is triggered. The agreement addresses the divisions for the sale and share of the income and costs for the property. The solicitor will (need to) explain it as it may create a indebtedness between the one of the parties to the other for future events. Its a repair mechanism usually.
Tenants in Common affects serviceability no different to joint tenant ownership. Whether there is a co-owerhsip agreement or not doesn't matter from a lending point of view - it doesn't have much legal effect either.
These agreements don't convert JT into TIC and are not enough to do that. they usually stipulate who will do what, how rents are shared, what happens if one wants to sell and hte other doesn't (will need to go to court to force a sale though). etc
