Before you take out a joint loan, or any other form of joint credit, it’s important to know some of the benefits and risks involved.
There are several advantages to taking out joint finance. For example, you may be able to borrow more money than you could by yourself. This could help you get a mortgage together, buy a new car or cover the costs of a home renovation.
It can also make it easier to manage debt, as together you may be able to afford the repayments more comfortably than you would by yourself. And if one of you is not earning an income for a period of time, you’ll ideally still have the other person’s income to fall back on.
If you take out a joint loan, you’ll both be responsible for paying back the total amount of the loan, not just your half. So if one partner decides not to pay, or can’t pay, the other will need to ensure the repayments are still met.
If you have a joint current account, you may also have a joint overdraft. Again, it’s important to remember that if you use your joint overdraft, you’ll both be responsible for paying back all the money which is overdrawn.
In the UK, you can’t get a joint credit card. This is because the credit agreement is only signed by one person. However, you can give your partner access to your credit card account by adding them as an additional card holder. They’ll get their own card to use which will be linked to your credit account.
Additional cardholders are not legally responsible for making payments. So it’s important to only add people you really trust as you could be left having to repay the full debt.
A relationship breakdown can be difficult and may affect your finances. Paying the mortgage after a separation and making repayments on any joint loans will still need to happen, but it’s worth letting your bank know if you’ve separated.
If necessary, your bank may be able to freeze any joint accounts. They may also be able to remove your partner from your credit card account if they've been added as an additional cardholder. However, you'll still be responsible for repaying anything they may have spent on your credit card.
If you don’t need access to the funds right away, why not look at building up some savings in a joint savings account first? There are things you can do to help grow your savings quickly as a couple and it may reduce how much you need to borrow.