A joint bond when you live to­gether un­mar­ried

CityPress - - Business -

Joint bonds are pop­u­lar, says Steven Barker, head of home loans at Stan­dard Bank, ac­count­ing for at least 40% of to­tal home loan ap­pli­ca­tions.

“We find the ma­jor­ity of joint bond ap­pli­ca­tions are by mar­ried cou­ples, but there are also nu­mer­ous ap­pli­ca­tions that come through from un­mar­ried cou­ples,” he says.

In this sce­nario, you need to be fully aware of the risks of a joint bond.

“The main risk is that you are not re­spon­si­ble for only 50% of the debt. You are jointly and sev­er­ally re­spon­si­ble, which means that if any­thing goes wrong, you could be held wholly re­spon­si­ble for 100% of the debt,” Barker warns.

This would be the case if the other bond holder dies or ab­sconds – leav­ing you hold­ing the debt.

If you are go­ing to en­ter into a joint bond agree­ment, you should have a le­gal doc­u­ment drawn up to pro­tect your­self fi­nan­cially. You should also take out life cover that will set­tle the bond if ei­ther bond­holder dies.

“A joint bond may seem to be the an­swer for af­ford­abil­ity is­sues, but many peo­ple fail to re­alise that un­wind­ing a joint bond, for what­ever rea­son, is never sim­ple,” Barker says.

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