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‘Going solo’ may be consideration in property purchase

1/07/2010

Being married or in a long-term relationship doesn’t automatically mean property finance has to be sought in joint names – there may be benefits in “going solo”.

According to Smartline Personal Mortgage Advisers Managing Director, Chris Acret, taxation considerations, an imbalance in the financial status of the partners or one person’s poor credit history may all be valid reasons for one partner to apply for finance on their own – either for investment or owner-occupier property.

“You should never take a ‘one size fits all’ approach to property finance,” Mr Acret said. “For some people there may be value in having just one person in the relationship seeking finance, although this can obviously have a considerable impact on issues such as loan serviceability.

“There are numerous considerations in any property purchase and determining whether this is best done as a couple or as an individual is certainly one of these.

“Many people have financed and purchased their first investment property jointly thinking that’s the way it should be done, only to later discover that this has actually been to their detriment.

“Subsequently, we’re seeing an increasing number of people who are now more mindful of the impact that the financing and ownership structure can have and seeking taxation, financial planning and mortgage advice upfront.”

While in the past investment property may have been purchased by just one person in the relationship to maximise negative gearing benefits and minimise capital gains tax, changing relationship dynamics are having an increasing influence.

For example, it may be that two people entering their second marriage may have quite different financial situations, with one having very little in the way of assets and the other having considerable wealth.

Alternatively, the credit history of one may be poor, either as a result of their own actions or the vengeful actions of a former partner which has resulted in numerous credit defaults.

“In this environment you want to put your best foot forward with the banks and ensure your application is as strong as possible,” Mr Acret said. “If it suits the couple and the deal, it may be best for just one person to apply for the finance and purchase the property.

“Having said that, it doesn’t necessarily mean this has to be your ongoing strategy. We have clients with large property portfolios, where some properties have been purchased jointly, some in one partner’s name and some in the other’s.

“Each property purchase is very different and your own personal situation, the deal itself and prevailing circumstances will dictate the best approach for each.

“This is where the expertise of an experienced mortgage adviser can be priceless – working with the others in your adviser team, they can assist you to determine the best way to purchase your property.”

As always, talk to your Smartline Personal Mortgage Adviser for more information.

 

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