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Pros and cons of joint borrowing

From paying for a wedding to buying a property, there are loads of reasons why you may want to borrow money with your partner.

Before you get a joint loan, or any other form of joint credit, find out about some of the benefits and risks involved.

Advantages of borrowing money together

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, cover the costs of a home renovation or finance a wedding.   

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.

Risks of taking out a loan or overdraft as a couple

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 that's overdrawn.

A partner’s poor credit score can also affect yours. When you have joint debt with someone, your credit history will be linked to theirs. If you apply to borrow money in the future, even if it’s in your own name, the lender can take the other person’s credit history into account, as well as your own. 

It’s a good idea for both of you to check your own credit report before you apply.

Risks of sharing a credit card

In the UK, you can’t get a joint credit card. This is because the credit agreement is only signed by one person. 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.

Explore: Tips for paying off your credit card

Joint debt after separation

Relationship breakdowns are difficult and they may affect your finances. Any joint debts you have with your partner will have ‘joint and several liability’. This means that, if your partner is unable to make the repayments, you will need to repay the full amount.

Although you’d need to continue making any mortgage and joint loan repayments after a separation – it’s worth letting your bank know if you’ve separated.

If necessary, your bank may be able to freeze any joint accounts. They can also 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’re dealing with separation and want to discuss your finances, you can contact us.

Explore: Where to go for assistance