DANGER of applying loan as a couple!

DANGER of applying loan as a couple!

 

In my 6 years career in this industry, I have come across plenty of pre-marriage couple (aka boyfriend and girlfriend) whom decided to purchase a dream house, move in together and live happily ever after.

However, things doesn’t turn out as expected.

From my data records over pre marriage couple applying for housing loan, 60% ended with break up. This leads to issues on the house with both of their name still on it and decided to removed the other party from Loan or SPA ownership.

Fight over the name


Most of the time, break up will eventually lead to argument/discussion over changes of ownership name for the property.

Example:
1.
A and B

SPA :  A+B
Loan: A+B

If ex-couple decided the draw a line between them, they will separate the ownership for SPA or Loan. The only way to change the ownership is by refinancing.

There’s two costs for this, legal fees for Loan and Legal fees for SPA, technically it’s like redo the loan all over again.

If your loan is free of encumbrance ( free from bank loan ), then the costs of changing ownership will be cheaper.

The ex-couple can save money by not amending the Loan part and remain A+B. However, it affects the loan eligibility of either party whose name still shown in CCRIS of this property/mortgage loan. Because this loan will still be his/her debt.

Example:

2.
A and B

SPA: A
Loan: A+B

In this case, ownership of the property has been solely assigned to A.

B required to pay the installment together with A, but without the ownership of the Property.

If B is AOKAY with his/her name still under this loan but only A paying for the entire loan installment, as the property solely owned by A. They can save huge LEGAL fees cost.

Break up

HUGE COST!

As mentioned above, by changing the ownership will be charged a hefty LEGAL fees on SPA or LOAN or BOTH.

For simple calculation, SPA legal fees will be 1% on the property value, LOAN legal fees will be 1% on the borrowed amount.

Example

– Rm600k Property value, SPA legal fees 1% = Rm6,000

– 90% loan margin, RM540,000 ( RM600,000 * 90% ) 1% LOAN legal fees = RM5,400

Remarks :

  • SPA always put the main buyer’s name, so if unfortunate happens at least don’t have to pay LEGAL SPA fees to transfer ownership.
  • Finally, avoid joint borrow purchase property with boyfriend or girlfriend. To avoid the unfortunate drama affairs and pocket burning.

Cheers

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